PEX Card Adds $3.2M in Funding to Scale Prepaid Expense Card Solution for SMBs

New York City-based PEX Card, provider of prepaid expense card solutions for the SMB market, announced today that it has secured $3.2 million in Series B funding from existing investor iNovia Capital, as well as Bluff Point Associates, Augury Capital and other private investors. This brings the company’s total funding to over $5 million, and it plans to put the new funding to hiring both sales and technology staff to grow its existing customer base. Originally launched in 2009, the company has processed over one million transactions to date, and has seen a 65 percent increase in transaction volume over the past year.

Founded at the brink of the financial crisis of 2008, the company saw its service being embraced by SMBs who were having their credit lines cut by major banks but still had the same amount of expenses and needed a better way to manage their cash flow. “We’re a corporate prepaid card, and the main differentiator between this and a credit card is that we provide the service in a prepaid environment with control tools. This can be thought of as a petty cash box in the old age, we’ve basically converted that into a card-based system controlled using online tools,” founder and CEO Toffer Grant said in an interview.

Getting set up with the company’s prepaid Visa card, which is issued by Bancorp Bank, is akin to opening up a bank account. After filling out an application, the company will do a background check and verify the company’s information. From there the company opens up an account under their name to link with the PEX Card backend, a dashboard that lets companies control their cash. Clients can issue as many cards as they want, and can preset individual amounts or set cards to auto-refill or top up every night. Companies can also reload instantly, a feature intended for SMBs that have employees constantly on the road either for sales, operations or order fulfillment for things like gas, materials, and equipment.

The company charges a $50 initial setup fee, however, does not charge for issuing a card, and instead charges companies $7.50 per card per month, which is waived for the company if at anytime an employee spends $50,000 or more. Employees also have access to an employee portal which provides them with a statement for their spending, which they can staple their receipts to and submit if necessary.

Other companies have also been looking to disrupt the way employees and companies manage their expenses. Expensify is one online tracking tool that lets employees take a photo of their receipts, upload them, generate expense reports, and import items from bank statements, and it also provides mobile apps across all platforms and integration with Google Apps for enterprises. However, Grant notes that most competitors let business owners deal with expenses after the fact, what he refers to as the credit card mentality.

“Those type of businesses are really focused on keeping track of spending after it happens, so being more organized about receipts. Companies like that are all about people who have to submit an expense report and get a reimbursement. Our side of the industry is more focused on company-funded expenses, where the money is being put up by the company not the employee,” Grant added. “So, the emphasis is on shifting the way people have been trained to think by credit card companies, which is go spend, look at your statement later, and then talk to your employees about it. So we try to take out the surprise that business owners have to think about when it comes to cash flow.”

The other big challenge Grant noted was the preconceived notions businesses and individuals have about prepaid cards in general, namely that they’re only used for gift cards and phone cards. He said a big part of PEX Card’s strategy will be educating their target segments about the benefits of their service. It also has mobile apps and features in development which it will be looking to launch over the new few months. With companies traditionally moving to cloud-based expensing solutions, PEX’s prepaid Visa offering may seem outdated, but presents a proactive rather than reactive approach to expensing, something that should help SMBs avoid surprises at the end of the month.

Humayun Khan

Humayun Khan

Humayun Khan is a Senior Writer and Analyst at BetaKit. A marketing graduate with honors, Humayun's work experience spans the fields of consumer behaviour with noted contributions in an academic paper published in the Journal of Consumer Psychology and market research consulting having coordinated projects for a major financial services client at Decode Inc. More recently he was involved in business strategy as a Business Analyst for an equipment rental outlet and prior in the National Marketing Department at Ernst & Young LLP. He is passionate about emerging and disrupting technology and its ability to transform and create entirely new industries.

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