Extend Raises $40M to Empower Banks with Virtual Cards

Extend Secures $40 Million to Empower Banks Against Fintech Disruption

A significant trend in the financial technology landscape involves companies assisting traditional banks in competing with innovative fintechs. While numerous fintechs focus on aiding other fintechs and banks with product launches, fewer concentrate on bolstering the incumbents' competitive edge.

Introducing Extend: A Digital Payment Infrastructure Provider

Extend, a New York-based startup, is dedicated to providing financial institutions with the digital payment infrastructure necessary to offer virtual cards to their clientele. Recently, the company successfully closed a Series B funding round, raising $40 million, with March Capital leading the investment.

The investment round also saw participation from B Capital, Point72 Ventures, Fintech Collective, Reciprocal Ventures, Wells Fargo, and Pacific Western Bank. This latest funding brings Extend’s total funding, since its founding in 2017, to $55 million.

Seamless Integration with Existing Infrastructure

Extend has established direct integrations with major payment networks and processors, including Global Payments/TSYS, Mastercard, and Visa. The company’s technology is designed to support virtual cards while leveraging the existing infrastructure already in place at banks.

This approach allows card issuers to integrate Extend’s services with their current offerings without requiring any complex technical implementation, as stated by the company.

Impressive Growth and Transaction Volume

Currently, Extend serves over 2,000 business customers and is experiencing a growth rate of 30% each month. The company boasts a processing volume – representing client spending on its virtual cards – nearing $2 billion. Revenue is generated through basis points earned on each transaction.

Partnership with American Express

Last month, Extend announced a strategic partnership with American Express. This collaboration grants millions of the credit card company’s small and medium-sized business cardholders access to virtual cards through their existing physical cards within minutes.

Andrew Jamison, CEO and co-founder of Extend, explained that this development “exposed these digital capabilities to every existing cardholder.” He emphasized that this marks the first instance of virtual cards being integrated as a feature on existing plastic cards, rather than being offered as a standalone product.

A Unique Approach to Virtual Card Access

Jamison noted that most competitors necessitate customers to switch bank partners and open new accounts. Furthermore, existing virtual card solutions have traditionally been limited to enterprise-level clients.

Extend positions itself as the first company to deliver an issuer-agnostic solution for SMBs at scale, offering a “virtual card platform-as-a-service.”

The Value Proposition for Businesses

According to Jamison, the primary appeal for businesses is the ability to access digital capabilities without the need to establish a new account. This eliminates a significant barrier to entry and streamlines the adoption process.

Positioning within the Corporate Spend Space

Extend now joins a growing ecosystem of companies focused on the corporate spend sector, alongside players like Brex, Ramp, and TripActions.

The Founder’s Background and Vision

Jamison’s professional background includes roles at SAP and American Express, where he relocated from London to the U.S. in 2009 to spearhead the integration of new digital payment capabilities, including virtual cards.

He recounted his experience with virtual cards at American Express, noting that the volume grew from $500,000 to double over five years as digital payments gained traction.

The Genesis of Extend

Jamison observed that while virtual cards were initially reserved for large corporations, Marqeta’s emergence as a direct provider of digital cards signaled a shift in the industry. This realization led to the founding of Extend, based on the belief that virtual cards could serve as a catalyst for the broader $40 billion transformation of the payment industry.

Building for the Digital Era

Despite the robustness of legacy platforms, Jamison recognized their limitations in the current digital landscape. He aimed to create a digital asset and connectivity framework that would enable Extend to assist banks in scaling their capabilities across their entire portfolio, ultimately extending to the consumer level.

Focus on Infrastructure, Not Underwriting

Extend does not engage in underwriting or transaction processing. Instead, the company focuses on providing the underlying technology.

Jamison stated that Extend’s goal is to “create 21st century technology and make the traditional banks look and feel like they were actually born in the 21st century,” effectively helping incumbents bridge the gap with more agile fintech competitors.

API Solutions for Innovation

Extend also provides a range of API solutions for banks and third-party service providers, designed to facilitate the creation of new products for their customers.

The company has developed a “developer-friendly” API catalog, empowering issuers to offer APIs directly to their customers.

Expanding Partnerships with Financial Institutions

Currently, Extend has established partnerships with seven traditional financial institutions, with a target of reaching 20 by the end of the following year. City National Bank and PacWest are both customers and investors in the company.

Investor Confidence

Sumant Mandal, co-founder and managing partner of March Capital, expressed his confidence in Jamison’s extensive experience at American Express. He highlighted Jamison’s understanding of the critical need for banks to embrace modern payment solutions in the face of fintech competition.

Mandal noted that customers consistently praised the frictionless and user-friendly experience, with onboarding taking less than five minutes.

A Unique Value Proposition

Mandal believes Extend’s ability to upgrade bank payment infrastructure without requiring a complete system overhaul is a key differentiator. This allows banks to offer comparable products and features to fintechs in the virtual card issuing and corporate expense management space.