RAMP Launches Treasury Product, Challenging Digital Banks

Ramp Expands into Digital Banking with Ramp Treasury

Ramp has established itself as a significant player in the corporate card and expense management sector. The company has broadened its services to include travel solutions and bill payment processing, securing over $1.2 billion in venture capital funding in the process.

The fintech startup, now six years old, is announcing a new direction today. This expansion moves it further into the realm of digital banking with the introduction of a new product called Ramp Treasury.

A New Approach to Business Finances

Ramp’s objective with this new offering is to enable customers to generate earnings on their funds, rather than simply focusing on cost reduction, according to CEO and co-founder Eric Glyman in an interview with TechCrunch.

Glyman explained that analysis of client-linked checking accounts and deposits revealed that the majority were yielding no interest at all – a 0.00% rate. Ramp Treasury is intended to complement existing bank relationships, not to supplant them.

Earning Potential with Ramp Treasury

Businesses utilizing Ramp’s Treasury product can now deposit funds into a business account and earn a 2.5% return. Alternatively, they can invest in a money market fund for potentially even greater yields.

The liquidity of funds held within the business account ensures quick access for bill payments, providing a practical advantage.

Strategic Partnerships

While not a bank itself, Ramp is collaborating with financial institutions to deliver this service. The company has partnered with First Internet Bank of Indiana for cash deposit accounts and Apex for investment options, as Glyman emphasizes.

A Competitive Landscape

Ramp operates within a highly competitive market, facing rivals such as Mercury, Brex, Navan, Rho, and Mesh Payments. Brex, a prominent competitor, previously considered and then abandoned pursuing a bank charter.

Focus on Treasury, Not Traditional Banking

Ramp is not currently aiming to become a full-fledged digital bank. However, the introduction of a treasury account represents a substantial step forward for the company.

This move is anticipated to positively impact Ramp’s financial performance and solidify its position as a comprehensive financial solution for its clientele, allowing them to consolidate more of their cash in a single location.

Financial Performance and Growth

The company is currently withholding specific revenue details. In March 2023, Glyman reported a 4x revenue increase in 2022, driven by the rapid growth of its bill pay segment, though profitability had not yet been achieved.

Ramp surpassed $100 million in annualized revenue prior to its third anniversary in March 2022 and exceeded $300 million in annualized revenue by the summer of 2023.

Customer Base and Transaction Volume

Currently, Ramp serves over 30,000 customers, a significant increase from approximately 15,000 a year ago.

The platform has facilitated over $50 billion in purchases through cards and bill payments, a substantial rise from the $10 billion recorded roughly 18 months prior.

Revenue Streams

Ramp generates revenue primarily through interchange fees on card transactions and fees associated with bill payments.

Additional income sources include SaaS revenue from its Plus subscription, foreign exchange fees on international transactions, and affiliate commissions from travel bookings.

Treasury Product Economics

The addition of Ramp Treasury will also generate revenue through a spread earned from its banking partners on aggregate customer balances.

“A portion of this spread is returned to customers in the form of the advertised earn rate, while we retain some to ensure profitability,” Glyman stated.

Stability and Future Outlook

Ramp distinguishes itself as one of the few large fintech companies that has avoided employee layoffs in recent years, despite a valuation adjustment from previous peaks.

In April of last year, the company secured $150 million in funding led by Khosla Ventures and Founders Fund, achieving a post-money valuation of $7.65 billion, nearing the $8.1 billion valuation attained in March 2022.

Growth in Workforce

By the end of 2024, Ramp’s employee count exceeded 1,000, up from 730 at the time of its funding round last April.

Long-Term Vision

Looking forward, Glyman indicated that Ramp is considering an initial public offering (IPO) in the future.

“Our primary focus is on building a successful business, irrespective of whether we are a private or public entity,” he concluded.

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