Ramp, a six-year-old fintech startup known for its corporate card and expense management solutions, has taken a significant step forward by introducing a treasury product called Ramp Treasury. This latest addition brings Ramp closer to the digital banking domain, offering customers the dual benefits of saving money and earning interest on their deposits. With over $1.2 billion raised in venture funding, Ramp has solidified its stature as a major player in the financial technology space, venturing deeper into services that drive both customer value and revenue growth.
Diversifying Service Offerings
Over the years, Ramp has steadily broadened its array of services, evolving from primarily providing corporate cards and expense management to more comprehensive financial solutions like travel and bill pay. The unveiling of Ramp Treasury is a pivotal development, presenting businesses with an enticing option to store cash and earn an impressive interest rate of 2.5% or even higher returns in a money market fund. This strategic move aims to enhance liquidity for businesses by ensuring swifter access to funds for bill payments and simplifying the financial consolidation process for customers.
An emerging trend in fintech revolves around partnerships between innovative startups and traditional banks to deliver enhanced financial services. Ramp aligns with this trend by collaborating with First Internet Bank of Indiana and Apex to develop its treasury product. Unlike digital banks that strive to replace existing bank accounts, Ramp’s approach supplements customers’ financial operations by offering an additional repository for business cash. This ensures that while clients continue to use their traditional banking services, they can also benefit from the financial advantages provided by Ramp Treasury.
Competitive Landscape and Strategic Positioning
In a highly competitive fintech market, Ramp operates alongside firms like Brex, Mercury, Navan, Rho, and Mesh Payments. Brex, a notable competitor, had initially pursued a bank charter but later decided against it. However, Ramp’s strategy with its treasury product is not aimed at becoming a digital bank. Instead, it seeks to broaden its service range, driving up revenue potential and enhancing customer convenience. With the introduction of the treasury account, Ramp aims to significantly boost its profitability by encouraging customers to retain more cash within Ramp’s ecosystem rather than spreading it across various accounts and institutions.
Despite significant growth and expansion, Ramp has remained guarded about disclosing specific revenue figures. In March 2023, CEO and co-founder Eric Glyman indicated that Ramp’s revenue had quadrupled in 2022, significantly buoyed by its rapidly growing bill pay segment. By mid-2023, Ramp had exceeded $300 million in annualized revenue, a significant jump from crossing the $100 million milestone before its third anniversary in March 2022. In the same period, Ramp’s customer base doubled, surpassing 30,000, and the company managed over $50 billion in transactions through its cards and bill payments, a considerable rise from $10 billion just 18 months prior.
Revenue Streams and Financial Health
Ramp’s revenue model is multifaceted, including earnings from interchange fees on card swipes, transaction fees from bill payments, and SaaS revenue from its Plus offering. Additional streams include foreign exchange fees from international money transfers and affiliate fees from travel bookings. The introduction of Ramp Treasury will further diversify its revenue portfolio, earning through a spread from bank partners on customers’ business account balances. This spread will be partially returned to customers as interest, while a portion will be retained by Ramp for profitability.
One of the standout aspects of Ramp in the fintech sector is its avoidance of layoffs, even as its valuation declined from earlier highs. In April of the previous year, Ramp successfully raised $150 million in a funding round led by Khosla Ventures and Founders Fund, reaching a post-money valuation of $7.65 billion, close to the $8.1 billion valuation announced in March 2022. By the end of 2024, Ramp’s workforce had grown beyond 1,000 employees, up from 730 the previous April, reflecting the company’s robust expansion and stability in human capital management.
Future Aspirations and Market Impact
Ramp, a fintech startup established six years ago, is recognized for its corporate card and expense management services. Recently, Ramp has made a noteworthy advancement by launching a new product called Ramp Treasury. This innovative service moves Ramp closer to the realm of digital banking by offering customers the chance to save money while earning interest on their deposits. The introduction of Ramp Treasury is a strategic step that enhances the company’s offerings, providing added value to its customers. Over the years, Ramp has garnered over $1.2 billion in venture capital, cementing its position as a prominent figure in the fintech industry. This influx of funding has enabled Ramp to explore and expand its range of services, thus driving both customer value and revenue growth. The launch of Ramp Treasury signifies a pivotal moment for the company as it continues to venture into new financial territories, solidifying its commitment to innovation and customer-centric solutions in the ever-evolving financial technology landscape.
