Modernizing Corporate Spending with Brent Jackson of Torpago
Is there really more money and less risk when partnering with financial companies? In this episode of PayPod, host Jacob Hollabaugh sits down with Brent Jackson of Torpago to discuss the spend control features to help businesses manage their expenses more efficiently. Torpago is a financial services and spend management platform. Looking to stay on top of the latest developments in payments and fintech? Then you won’t want to miss this episode!
Payments & Fintech Insights In This Episode
- The wide range of industries Torpago serves
- How Torpago allows for spend control
- Brent tells us how fast reimbursements are the future
- Torpago’s reward program and the way Torpago customizes it for each customer
- Torpago for SMBs and large businesses
- The future trends Brent predicts
- The advantages of partnering with financial companies
- And A LOT more!
Brent Jackson : Torpago
Torpago is a financial services and spend management platform on a mission to disrupt traditional corporate credit cards and modernize spend management for businesses of all sizes. Torpago empowers companies with simple and easy solutions that grant more extensive control and transparency of company spending. The Torpago cards and software enable thousands of businesses to better manage spend.
Featured on the Show
PayPod is the leading voice in the payments and fintech industry, covering payments, risk management and new technology. Host Jacob Hollabaugh interviews leaders who are shaping the payments and fintech world, as they discuss the latest developments in the payments and fintech industry.
Jacob: Welcome to PayPod, the Payments Industry podcast. Each week, we’ll bring you in-depth conversations with leaders who are shaping the payments and fintech world from payment processing to risk management and from new technology to entirely new payment types. If you want to know what’s happening in the world of fintech and payments, you’re in the right place. Hello, everyone. Welcome to PayPod. I’m your host, Jacob Hollabaugh. And today on the show, we are going to be discussing corporate spending, how to simplify it, how to make it more empowering for your employees, but controllable for you as a business owner. Essentially, how you can spend smarter as a business. And I will admit as someone who in a previous life may have blurred the lines between what should and should not be put on a company card, I’m definitely aware that this is an industry that was ripe for some better processes, and I’m excited to learn how one such company is trying to help business owners better manage employees like that former version of myself. So excited to get into it. Joining me to explore these topics is Brent Jackson, founder and CEO at Torpago, the Financial Services and Spend Management platform that’s on a mission to disrupt traditional corporate credit cards and modernize spend management for businesses of all sizes. Brent, welcome to the show. Thanks so much for being here. Absolutely. Jacob.
Brent: Absolutely! Jacob. Thanks for having me. Excited to chat.
Jacob: I am as well, assuming I don’t know how many bad memories of mine or know infractions possibly of mine in the past are going to come up, jog my memory as we talk through some of this stuff, but I’m excited to get into it. Let’s start off at kind of a high level before we dive into how Torpago is working to change and improve things in the world of corporate spending, traditionally or historically speaking, however you want to say it, what have been the main systems in place to handle company credit cards, control employee spending, conduct reimbursement, etcetera? What’s the past version of this space look like?
Brent: Yeah, so past version we call kind of the more legacy stack is really something along the lines of one of the major card issuers. So maybe a business is using like Amex, Capital One and then they use maybe 2 to 3 different software or even Excel platforms where they’re trying to reimburse their employees or approve charges. So typically it’s like an Amex, maybe a Concur Expensify or maybe people are paying for things out of pocket getting reimbursed through their payroll. But yeah, basically the legacy stack is pretty scattered and you know, it was missing kind of one system to encompass everything for employers.
Jacob: And you kind of already started to allude towards some of these, but to ask it directly, what are the friction points or the shortcomings in that legacy system, in the corporate spending space that you saw and that led you to want to found Torpago?
Brent: Yeah a couple. The first one is just underwriting and access to credit. So a lot of the banks really haven’t adapted their underwriting practices to better understand what modern businesses are doing. So really what the old school approach was was, hey, let’s underwrite business cards like consumers. Let’s look at their FICO score, their history with the bank or with the institution and give them credit that way. So at Torpago, we take a more holistic picture. We do do soft credit polls. So we incorporate some of that. But our primary factors are verified data sets. So things like banking data, which we use, plaid accounting data, financial data, industry trends, we’ve built our own proprietary underwriting from the ground up that’s a little bit more encompassing and allows us to give higher limits and sort of expand our credit box to modern businesses.
Jacob: And are you doing that still strictly on the business level or are you going that next step to like the individual within the business level and actually having different approval process for an employee within a business?
Brent: It’s all at the business level. So if you had a business or your business would get approved for one credit limit. And then as the business owner, you can add employees and allocate out part of that limit to those employees.
Jacob: Makes perfect sense. Before we I want to ask some specifics of some of your specific different service offerings. But to back up one last time, what were the businesses or industries that historically were the big drivers of the need and incorporating the legacy versions of this? And then what types of companies are maybe you looking at industries that are the untapped industries that the better services that come out, the better products like yours that come out, you’re going to see that growth drive of these areas need this, but they haven’t used it as much because of all of these pain points of the past.
Brent: Yeah, I would say maybe the blessing and the curse of our business is that every company spends money, every company has some kind of headache and pain point or war story within this space. Specifically for us at Torpago, we focused on non venture backed companies, really sort of Main Street America kind of non venture backed, non tech businesses is where we’ve found to be underserved and we found a lot of success early on. So for us that’s everything from manufacturing, real estate, construction, e-commerce, consulting, basically real traditional businesses that the larger software vendors have ignored and they really haven’t benefited from a lot of this modern technology. So we’re serving them and offering them better platform, better workflow, you know, at an affordable cost. And we’ve been pretty happy so far with the results and what we’ve been able to do.
Jacob: Is there any size company that makes more or less sense for you to work with? Because I’m even thinking down to the individual level. When I asked that previous question, I’m thinking selfishly. Of I run independent production agency right now it’s just me freelance gig economy. But as it starts to expand and I have employees, there’s plenty of people within the creative space gig economy type space that do X, but outsource parts Y and Z of it, where in the past it like wouldn’t make any sense for someone like that to find a way to give a way to spend for that 1 or 2 contract worker with them. So but with something like yours, it might be more beneficial. Is there a size of scalability that is required that where the cost isn’t going to make sense for the smaller to work with you?
Brent: Yeah. No, no size requirements. I mean, we’ve got a lot of single member LLCs, sole operators using our cards and then we have all the way up to a thousand person businesses, publicly traded companies. The beautiful thing is the software we’ve built is very configurable and can be turned on or off as needed. But yeah, somebody like you, like if you wanted to sign up, you could start issuing virtual cards to some of your team. You can set really specific controls like, hey, maybe they’re buying like a new microphone for you and you can make sure that virtual card only works with one certain vendor, one part of the day. You can get really granular with the controls and as a business owner, feel confident that your team is empowered to spend what they need but not have the risk of overspending like maybe some people have done it.
Jacob: Absolutely. That’s actually the first kind of specific I wanted to ask you about that. Spending control definitely seems to be a big feature and a big differentiator from what would have legacy type of products would have been in the past to kind of a new benefit of your services. What percentage of customers are you seeing use those spending controls? And can you give me a little detail on like how granular can you get with that? Is it truly employee by employee? If I’m running a business with, you know, 50 people that are going to have a virtual or physical card, how granular can you get with those spending controls and how often are you seeing people actually use that? Because I would assume if I’m the employee in that circumstance, I definitely understand why I might have a control of like, Hey, we told you, you’re able to buy this and we gave you the way to do it. But that’s all it’s for. I would totally understand, but I would still possibly imagine there’s maybe some little pushback or friction of like, Oh, wow. Like, do you not trust me? Like you’re putting these controls? So what have you kind of seen in adding those in?
Brent: Yeah, for sure. So we see over half of our businesses are using our controls in some form or some shape. You definitely get some pushback from some of the employees, but I think the benefits definitely outweigh that. So for the company, you have more control. We have integrations into the accounting system. We’re saving lots of time for the company and for the end user. They’re happy because they don’t have to front the charges anymore. So the old school approach was, Hey, John Smith is in your sales team, he’s buying airlines, hotels, he’s got a float that and get reimbursed every two weeks, every month. That works out well for more senior established employees that may be comfortable floating that. But if you have some more newer folks, junior team members, that can get expensive for them, Right. So they become happy and amenable to it when they realize they don’t have to float the charges. And it’s just a win win for everybody we’ve found so far.
Jacob: Yeah, certainly. And I can think back to I didn’t myself go into consulting right out of school, but I had a lot of folks that I graduated with that did that immediate moment was like, This is great. I got this amazing job and like, I’m making a good amount of money for being right out of school. But also I’m traveling and they’re having me pay for it up front. And I’m kind of in a weird situation where I have no money until the once a month I get a paycheck plus a reimbursement, and then I’m okay for like a week until I book everything else and be like, Yeah, that can be a little more frustrating depending what your paycheck looks like. On who has the authority with those cards because the other kind of thing that came up after I’d asked that last question was there might be a hidden benefit of if you have an employee who’s really causing a stir of like, what are these spending controls that might tell you something about that employee of like, why is this such a bothersome to you? Do I need to be aware of anything? So it might be like a little hidden benefit, but does the business owner have complete and utter authority over being able to make immediate changes at any time to those spending controls? Does the employee ever are they allowed to override or have any sort of override type of settings or ways to, in a pinch in a moment, be like they would approve this? It’s you know, the current controls don’t allow but this would be approved. I don’t have time to go get that approval or make that change.
Brent: Yeah. So the business owner has full control. He or she can automate or delegate access as an admin to their accounting or finance team. So CFOs, controllers, they can have similar controls where they can in real time adjust the limits and the policy for those employees. The employees would never be able to override anything. There’ll be there’s a defined like spending policy and rule set and the employees can spend within that. They can request changes in their manager or the finance accounting team can approve those in real time. But the nice thing is the employee would never be able to go rogue and say, Hey, you know, I think my boss would approve this. I’m just going to go ahead and do it kind of thing. So they’re really. Specific guidelines set in place. And depending on the size of the business, it takes somebody in your accounting team maybe 30 minutes to an hour and a half to set up the controls. And if you can dedicate that time to set it up upfront, then you can really benefit long term from the structure and control.
Jacob: Absolutely. So then on the reimbursement side of things, you have your platform for reimbursements as well. What makes that different or better than your current competitors, as well as kind of better a new flow compared to the more traditional legacy stack way reimbursements would have been done?
Brent: Yeah. So reimbursements is a new module for us that we just released and really we released it out of the necessity and the realization that not everybody’s going to have their corporate card 24 over seven. So for those off chances where they don’t have their card, we want to be able to capture all the spend under our platform for our customers. You know, what we’re doing different is we’ve built more automation. So things like being able to send your receipt to reimbursements at Torpago. And then our system is intelligent enough to scan all that data and automatically create a reimbursement claim for you that can be automatically approved by your boss with preset conditions and you can get reimbursed daily. So a lot of these old school platforms are like, okay, well, every two weeks, every month, whenever you process payroll, it’s slower really to get your cash.
Jacob: And you have that gap again that we had said before of like that creates problems potentially depending the level of employee.
Brent: Yeah, that one really hit home. I started my career at Deloitte and I remember every Saturday that’s.
Jacob: Who I was actually referencing earlier to. Oh, there you go. All of my friends in college I was in a great business school and I was like the only one that didn’t do finance accounting going to work for Big four. Here we go, Deloitte. There we are. Yeah, it seems.
Brent: Like it’s working out pretty well for you. But yeah, Deloitte pushes pretty hard on the college grads and every Saturday by like 5:00, if you didn’t submit your expenses, they would ding you in the performance reviews. And I remember how big of a pain that was. And yeah, just some memories are definitely popping up from that. Yeah.
Jacob: With that, then do you the reimbursements being a little newer, are there certain types of companies or industries where you see the cards reimbursement one being more advantageous than the other? Or kind of what split do you envision long term? Is almost any business type going to benefit more of, Hey, you should have you know, we got the virtual, we got the physical, you should have the cards, the limits in place, or are there some where a reimbursement makes more sense as like their go to way of doing their corporate spending?
Brent: Yeah, I would say cards definitely make the most sense. So having a card first strategy where you can deploy cards to your team makes the most sense. The bigger the company gets, though we do see specific individuals that will want to float the charges so they can get those Amex points, those chase points. Be honest, that is probably the one thing our system is lacking on a little bit right now is some of those point systems are valuable. We’re rolling out some pretty cool reward stuff over the next quarter. But I would say card first is definitely what we see the most of. And when we get into some of the bigger organizations, we will see some senior folks use their personal cards and then process reimbursements through through our system. That’s really more of a case by case basis. We haven’t really noticed too many trends by industry yet.
Jacob: Yeah. And so you said you are planning on rolling out some sort of getting into the rewards or the points space. Are you trying to do that internally? Is that going to be through partnerships? What’s the kind of goals or pending what you can and can’t speak about if it’s, you know, in the future here? But what’s the goals look like there?
Brent: Yeah, So we’re still kind of ironing out some of the details today. We do just flat cash back on every purchase. We have a baseline of 1.25% cash back. That’s unlimited cash back on all spending non-capped And then we do go higher in some cases for some businesses. But we’re rolling out is we’re going to be rolling out custom cash back offers at specific merchants. So maybe like 3% at Chevron, 5% at Target, you know, that kind of thing. Still working out some of the details. But, you know, we’re hoping that’s going to be coming out in the next quarter.
Jacob: Makes sense. And one of the other that’s, you know, future offering, But kind of one of I think if I saw correctly, your newest offerings, the powered by program. Can you tell me why that was created, what it offers? And if I’m correct, I don’t know if it said this on the site or if I was just putting it in these words. But to me, it kind of looked like a foray into the as a service world, like corporate credit card programs as a service. Am I reading that correctly?
Brent: Yeah, 100%. So think of this as corporate card and spend management as a service.
Jacob: You have one of the longer acronyms in the as a service game. I’ve got to say.
Brent: Maybe don’t use that as our formal acronym. We’re still kind of out the formal one, but card as a service, basically. So think of us as an enablement platform. We’ve taken everything that we’ve perfected over the last three years in building our own corporate card and spend management program, and we’re targeting powered by at banks. So specifically, there’s roughly 4500 banks in the US and they have very antiquated card programs and it can be very hard for them to invest their resources. To build their own software and both consumer and commercial card programs. So what we’re doing is banks can come to us. They get the leverage and benefit of all of our technology and our expertise, and they can launch their own fully branded card programs that they can resell to their customers and have a best in class experience, from underwriting to software to mobile apps to customer support. And we’re doing everything behind the scenes. And then the bank is the one on the front of the card and selling it to their customers. So super excited about that. That’s really the long term vision of Torpago is to power bank and financial institution programs behind the scenes and be that infrastructure layer to enable them to just better serve their customers and stay at pace with some of the bigger, bigger players in the space.
Jacob: So yeah, and so that is the long term vision then is more the white labeling as a service versus the building out direct Torpago users.
Brent: Yeah, we’re going to run both always. So we’ve got about 1400 or so direct SMB customers and we’re still signing up a thousand plus a month. So that’s a great business. We love working with small businesses. We’ll never stop that. But we just saw this huge, huge opportunity with the banks to partner with them and hence powered by. So just going to be running both. But we think powered by you know, longer term will overtake it in terms of scale and size.
Jacob: And you mentioned the size the number of banks, but why specifically anything besides just the market size, community banks, credit unions? I think I saw as kind of listed as the core initial target for the program. It was there certain disadvantages? You kind of referenced a few before, but if you can expand on that a little, why community banks, credit unions as that initial target for where to take that program?
Brent: Yeah, absolutely. So we’re agnostic. We can work with any bank, any credit union, but we’re hyper focused in the beginning on community banks specifically, you know, I would say SUB20 billion and asset banks, we found them to be the most motivated to want to keep up with trends in the market and offer just a better solution for their customers. A lot of them are using products from their core providers, FIS, Fiserv, Allan and they really just haven’t changed. And, you know, ten plus years, they’re great systems, but they’re secondary products like card issuance just are really kind of antiquated, just to be honest. And right now, with everything going on in the banking industry, there’s a lot of turmoil. And every day is a new new mystery in the banking space. So we found a lot of these community banks are very motivated to try and make their bank more sticky for customers, retain deposits and having just more products to offer to their customers. And corporate cards are one of those just makes that selling point so much better. And we found the banks to be just very, very motivated to want to launch programs right now given everything in the market.
Jacob: Yeah. And it makes perfect sense that the ones that, you know, don’t have the resources to keep up on all fronts that have one part of the business still really good would be very motivated to say, if not now, it’s probably going to be never of us getting caught up on all the other fronts and instead of trying to build it all out ourselves, partnering with those that do it the best makes plenty of sense. And since you alluded to it, that’s where I kind of wanted to go next to the kind of uncertainty in the banking industry. Now a days, it’s definitely a tumultuous time. We had the SVB collapse earlier this year, kind of a lot of negative sentiment. There’s a lot of shorting of the banks going on in the markets right now. Just overall state flux trepidation. Did you have any major reaction to the SVB collapse or learn anything new about the industry from that happening or the response to that happening?
Brent: Yeah, I mean, I think definitely anytime one of these sort of black swan events happens, you got to hit pause and make sure you learn something and make sure you’re positioned well, your partners are positioned well. So I think, you know, a couple of things to say. We definitely realized that our infrastructure and our sort of contingency plans were very strong. So we were luckily not dependent on one bank specifically. We had no exposure ourselves to SVB. So for us it was good just to see that all of our plans and failsafes had kind of paid off. We were able to get a lot of SVB card customers. So on the direct side we saw a ton of adoption from really solid businesses that had SVB as their corporate card. That was kind of an overlooked thing in this whole collapse, right? Everybody was talking about the deposits and what was going to happen, rightfully so. But a lot of credit card customers that, you know, really switched over. So we saw a lot of traction there. And yeah, I think, you know, going forward, there’s definitely going to be a lot of consolidation in the bank space. You really get to see kind of what management teams had been doing and who was really exposed. So I think there’ll be a lot of acquisition on the smaller bank side. And for us, you know, we’re just really excited about powered by. We think the timing could not be better just to get in front of banks and to accelerate some of their plans to launch better software programs and to partner with companies like Torpago to pair up our expertise on the software side with their capital and customer bases.
Jacob: Yeah, and feel comfortable asking you to play Predictor here because you alluded to some of it there. I know it’s normally not always great and it’s impossible to actually play a true predictor. But if I were to ask. You too. Do you think the banking industry, finance industry at whole is reacted strongly enough where there actively are making the changes and we maybe are going to get to a new normal, a stabilization a little quicker? Or do you think there’s going to be some more dramatic events that are going to occur in the near future to continue accelerating this change and basically have people woken up enough to be like, things have to change, this is what we should do different? Or do you think it’s going to take a few more of these events? This Black Swan event might be prolonged over a longer span than just the 1 or 2 banks we’ve seen fall recently?
Brent: I’m very confident in the banking industry. I would say today I think you will definitely see a couple more banks fall and you’ll see some consolidation with some more regional banks, some smaller community banks making acquisitions. But yeah, I think the way that the industry has acted has in responded has been very strong. Specifically the banks that we’re talking to, the CEOs, presidents, they have a very strong focus on their balance sheets and making sure they don’t make the same kind of mistakes that, you know, a signature or Silicon Valley made and making sure they’re diversifying their exposure into different asset classes, customer verticals, just being smarter overall with their capital. I’m very confident and optimistic on the banking sector. I think in a potential recessionary environment and high interest rate environment like we’re in right now, things are going to get a little worse before they get better. But I think long term, I remain very confident in the banking industry and very optimistic on where we’re going and what the banks are doing.
Jacob: Yeah, I mean, pretty much in lockstep with you there. One other then trend, I mean, we touched on, you’re moving into the as a service type of space and that is definitely been in the broader financial world, if not just every industry out there the last half decade, especially this boom in more niche down instead of big, big players doing everything, a bunch of smaller players coming in, offering a service, being able to do one part of some chain really, really, really well. You’re a part of that, you know, being able to offer yours as a service cards, as a service. Do you think there’s going to be a continuation of the proliferation of the as a service type of model? Or are you thinking at any point in the future where there might be a consolidation of or a need for a company to be not just one service again, but to be able to continue expanding or to possibly have that consolidation of the big players coming in and saying, That’s great. You learn to do that the best of anyone. Come join us in buying up. Do you think more expansion contraction in the as a service space, what are you kind of envision for the next half decade or so?
Brent: Yeah, the as a service space is here to stay. I agree with you. And what you were alluding to is that no longer can you just be offering one product or one service. I think a lot of SaaS and fintech companies were able to get away with over the last decade. I think you’re starting to see it in the public markets and the reaction to some of these stocks that are not trading as well because they really haven’t innovated much on the product side. Right? So we are of the belief that, yes, you’ve got to be the best at what you’re doing. But at the same time, you know, there’s a lot of new businesses being started and you’ve got to continue to innovate on the product side. You’ve got to make sure you’re serving your customers well. You’ve got to roll out new modules, new revenue streams. So yeah, I think there’s going to be some consolidation with some of these legacy as a service providers that didn’t innovate well enough. And I think the ones that are going to win over the next decade are going to be the ones that ship new product features very fast and just continue to innovate for their customers. And that’s really the name of the game that we see.
Jacob: certainly. And outside of anything we’ve kind of touched on already, is there any other trends you’re changes in the banking finance space? Corporate spending space, you see is kind of the biggest thing coming that you or Torpago want to keep an eye on and be ahead of in the next few years?
Brent: Yeah, on the commercial side and on the banking side, we’re seeing just a ton of desire from banks to want to get into the banking as a service space. Looking back to like four, three, four years ago when we started to torpedo, it was hard to find a sponsor bank and a bank that was willing to work with fintechs. So I don’t know if this is really a trend or not, but we’re just seeing a ton of banks that are looking to power fintech programs behind the scenes benefit from interchange revenue, banking as a service revenue. So I think there’s going to be a lot of new fintech started over the next decade. And specifically we’re seeing a lot of the venture dollars flow into the earlier deals like Series A, Series B, just because a lot of these later stage companies are sort of hurting and a lot of the money’s kind of moving up, you know, upstream to the earlier deals. So yeah, we’re excited about that and we’re just seeing a lot of willingness to partner with fintechs and power new programs.
Jacob: Yeah, there was definitely a bit of a tipping point between our competitors. You’re trying to do part of what we do know, keep away and then if we want to survive, we need to be the ones that bring in these people, partner with all these people and let them. They do something better than we’re going to build an internal team to do so.
Brent: Yeah, they 100% used to be of the mindset that, Oh, we’re a bank, we should be able to do this. You know, let’s just. Compete with them. But now I think the banks are wising up and they’re realizing that, hey, there’s more money and less risk to partnering and working with these companies. So yeah.
Jacob: Certainly. And that like, Oh, I’m a bank, why would I have someone else’s doing cards? Why would I want their services? And changing that too. If they do it better, why would I not want to partner with them and benefit from this versus being put out of business by it? If I’m stubborn and say I got to try to build something worse internally to use, so I’m with you, I definitely think it’s going to only proliferate in the next decade or so and continue to be a lot of growth in this space and a lot of interesting things to talk about. So love that. Well, Brent, it’s been a real pleasure to speak with you today. For those listening who may want to learn more about you or Torpago follow everything you’ve got going on, where would be the best place for them to go to do so?
Brent: Yeah, I would say our website Torpago.com and then follow us on LinkedIn. We’re very active there. We post daily and yeah, those would be the best places. If you want to come check us out and we’d be happy to connect with any businesses looking to sort of revamp their card program.
Jacob: Love it. Fantastic. We will, of course, link to those and more in the show notes below. Brent, thank you for your time and knowledge you’ve shared with me and the listeners today. Thanks for being here and hope to talk again sometime soon.
Brent: Yeah, likewise. Great chatting and appreciate your time, Jacob.
Jacob: If you enjoyed this episode and want to hear more, head on over to SoarPay.com/podcast to subscribe on your podcast listening platform of choice. That’s s o a r p a y.com/podcast.