Dive Insight:

• Rho Technologies, the parent company of Rho Business Banking, a digital banking company for businesses, is launching Rho Card, a corporate credit card.

• Rho Business Banking provides cash flow and expense management tools to small and medium-sized businesses (SMBs), start-ups and other companies. The company experienced 20-fold growth in transaction volume year-over-year in Q1 2021.

• The credit card offering suits businesses in these volatile times, Alex Wheldon, co-founder and chief product officer at Rho Business Banking told Payments Dive. Customers can change the terms of the credit card up to four times in a year which gives them flexibility to manage their finances, Wheldon said.

Dive Brief:

New York-based Rho Technologies is partnering with Mastercard to offer a credit card that can be integrated with Rho Business Banking’s online spend management system. Customers can renegotiate their credit card terms and perks in accordance with the cycles of their businesses.

“You could start off at 1.75% cash-back rewards in Q1, and then, in the beginning of Q4, you can be on a 60 day extended credit limit with 0% cash back,” Alex Wheldon, co-founder and chief product officer at Rho Business Banking said. “Our customers were demanding a product like our Rho credit card and early feedback during our beta testing has been good.”

According to a WiseGuy research, the global market for business spend management (BSM) software was $7.04 bn in 2018 and is expected to grow at a compound annual growth rate (CAGR) of 10.5% during the forecast period from 2019 to 2024.

Rho Business Banking’s transaction jumped to about $2 billion for the first four months of this year, which was about the same volume as the company posted for all of last year.

The corporate card is the first credit product by Rho Business Banking for its customers and it issues those cards in conjunction with Mastercard.

“Rho moved credit to Mastercard in conjunction with our new issuer bank relationship at Sterling [National Bank],” Wheldon said. 

The new credit card will have no annual fee, and will charge 0.5% transaction fee on foreign exchange transactions. The credit card will be auto-synced to accounting services to save time during reconciling expenses.

Until now, Rho Business Banking has been testing the card in beta form since last December and the initial response of users has been positive, Wheldon said. The company currently has about 1,000 customers and can serve companies ranging from about 50 employees to 1,000 employees, or potentially larger.

The company will take factors like credit history, cash balances, cash flow and spending patterns into consideration while providing a credit limit to their customers, Wheldon said.

Companies like TripActions, a travel management company, are also offering corporate cards as businesses seek to streamline their operating expenses. The Palo Alto based-company issues physical and virtual cards to businesses which their employees can use for business spending. This provides easy account reconciliation and better real-time control to businesses with respect to their employees using company funds, said Michael Sindicich, a general manager of TripActions Liquid.

TripActions raised a $500 million debt facility from Goldman Sachs, Comerica Bank, and Silicon Valley Bank to provide its customers with a short-term credit line on their credit cards.

The increased use of business expense management tools are here to stay, said Sara Elinson, a partner at auditing and consulting firm EY who leads the fintech M&A practice for the Americas. "After the pandemic, our general view is that it's going to continue," Elinson said. "It was a necessity, now it's part of the process and part of the flow, how companies are engaging."

Rho Business Banking's products help businesses bring all operating expense management on one platform for better control and insights, Wheldon said. The company plans on expanding its product offerings for SMBs and moving up-market to serve larger companies, Wheldon added.