Embedded finance is a recurring theme in our coverage on Tearsheet. With APIs and banking as a service platforms, firms in all kinds of industries are getting into finance. That’s the story line here. TripActions is an innovative business travel & expense platform that continues to evolve to serve its customers.
That meant launching its own travel agency. And it also meant launching Liquid, TripActions’ own payments solution that ties employee spending in to its software and includes corporate cards.
Michael Sindicich is the general manager of TripActions Liquid and was one of the first employees in the company. Michael joins me on the podcast to discuss the firm’s growth trajectory and how that impacted why the firm launched a payment solution. We also discuss the uptake of TripActions Liquid and where the firm is headed in the future with its fintech aspirations.
It’s a compelling journey. A couple years ago, we really started with thinking about a better way to book corporate travel. I think a lot of us early on had worked at other companies. Our founders certainly had traveled with their previous companies all around the world. And it was always a pain when booking corporate travel. And it’s super easy when you book personal travel when you’re using sites like Expedia or Kayak or some of the others out there.
And so TripActions started with building a better booking app, which was mobile first, along with a web app in order to book your corporate travel and connect with a travel agency and be on your way and have a more consumerized type experience. And then very quickly, we realized that we need to also own the support and the travel agents. So we actually hired and built our own travel agency. Instead of doing a model like a Concur where you might have a booking tool, but you pair it with another agency, we wanted to own the entire experience to have much more fluid, seamless experience. So if a traveler is struggling in the app, or they’re searching for a specific flight, and they call support, support knows exactly what they’re doing, and they can help them really quickly. So that’s what we built on the corporate travel side.
And then as we started to go up market, we needed to build our agency globally. We’ve opened up a bunch of different offices and have what are called PCCs in various countries in order to support local inventory at the best prices at the right currency.
We started with smaller accounts when we were just based in the US. That was about five years ago, and we were selling to your typical 50 to 100 person company. Now, we’ve expanded much more into the enterprise. So we’re serving accounts from Fortune 500 all the way down to 50 person companies. And these accounts are multinational. They need visibility and data and global inventory and support 24/7/365. The customers that we’re targeting with a lot of success now are even bigger companies than we did in the past — enterprise size companies.
Getting into payments
We were scaling travel extremely fast, going from a couple employees to 800 or so within four or five years and raising hundreds of millions of dollars on a $4 billion valuation. And so travel was sort of going on autopilot. We’re winning tons of customers. We’re expanding globally. We have our playbook. Everything’s good to go there.
And then we thought, what else can we do to build value for our customers? And when you look at most of the things travel, the messiness comes around payments — it’s different currencies, it’s needing to submit expense reports, it’s saving receipts, it’s needing to approve trips and have context as managers and then integrate that all those different charges and payments into your ERP. We realized that one of the first places that we could provide a lot of value is by actually introducing a virtual card into the travel platform, so that when an employee books their flight or their hotel, we can generate a new 16 digit card number and match that perfectly to the trip that they booked. The finance team doesn’t need to reconcile those travel payments at the end of the month.
With a typical online booking tool that you give to your employees, a lot of companies will just issue a standard credit card. They might have a corporate card — they’ll put that in the product. And then travelers use that. And then at the end of the month, the finance team reconciles — almost line by line — the transaction on the credit card statement with the booking.
Sometimes travelers actually have to advance their own personal funds, which can impact credit and life at home. They front that money and then expense that weeks later and get paid back weeks and weeks down the line. That was sort of the first messiness that we thought we could tackle.
So, we raised a $500 million debt facility from Comerica, Goldman and SVB to underwrite the customers coming to us for their central travel spend. We put that on to our corporate card, which we partnered on with Stripe. We’re on the Visa network.
With these three pieces, we could underwrite an account. Let’s say, a company like ZOOM spends X amount per month, we can underwrite them, put those virtual cards in the product, and then send them a bill at the end of the month, with a real time, reconciled, travel spend report that they can access anytime they want to. They pay us back on terms at the end of the month.
Along with Stripe, we issue physical cards. We paired our virtual cards with physical cards — you would treat that as a companion when you’re on the road. What you would do is you’d have our virtual cards to book your trips. With your physical cards, because we own the entire infrastructure, we can manage the policy around that. So a lot of companies would say you can spend $75 a day on food while traveling. We can set the policies such that those physical cards for those people in that policy actually turn on and can be used when they book a trip within TripActions.
You might say I can spend $50 a day on Ubers and Lyfts, or a couple of dollars a day on taxis or subways. We allow you to basically set these policies for your travelers so they don’t have to pay out of pocket. And they don’t have to reconcile and file expense reports when they’re on the go. That’s what we launched at the end of February 2020.
Adoption of Liquid
It’s been massive. In normal times, pre pandemic, we know that about 70% of expenses happen while people are traveling. So it was an incredibly natural kind of transformation to get into payments and into expense management powered by fintech. It’s a no brainer to add the virtual card into the travel product. It’s complementary. You get a rebate back on your spend, and you automatically reconcile all of your travel payments.
Since we launched it, a lot of our Fortune 500 companies and a lot of our small SMBs are adopting this like crazy. And while people weren’t traveling, once we got sent home during the pandemic, the team actually spent a lot of time and added resources to build end to end expense and spend management for our companies.
Now, we’re replacing a lot of our customers’ current expense management platforms, whether that’s a Concur, whether that’s an Expensify, and companies are switching to us and managing those payments and spend while people are at home. So instead of doing meals and the different expenses you would have while traveling, what we see is people are using our cards to buy things like work from home furniture or DoorDash or Uber Eats, and buy gifts for employees, as they’re coming on board — all the way into different types of software spend and what we call spot purchasing. So people are putting their Zoom and Slack licenses on us. They’re putting various types of expenses through our payments platform.
The entire value for the user is that you don’t need to advance personal funds for corporate spending. That’s a pretty odd practice. I remember the first time I got a job, I had to travel for work, and I had to put $2,000 on a personal credit card. I had to call my mom. And, you know, that was an awkward situation.
Another benefit is the actual filing of expenses is a pretty big waste of time, right? Let’s say you go to a restaurant and you pay digitally with your corporate card or your personal card. The restaurant needs to print out a receipt onto a piece of paper which you need to take a photo of and upload that back digitally. Then you need to code it right. With our platform, we know what trip you’re on. We know who you’re with and what you’re doing, because we integrate to the calendar. We know who the vendor is. So we can apply that to a specific policy. And then when you swipe our physical cards, we run that against the policy that your admin has set for you. We add all of that context. And then we even automatically approve it right?
I don’t care if one of my employees buys a hot dog or a pizza for lunch, as long as they’re staying within the policy that I’ve set for them. Now managers don’t just ignore or just click through approving expense reports, because they’ve got things without context to approve in emails. Finance teams obviously don’t need to review that — it goes automatically into the ERP. So it automates the entire process of expense management.
And ultimately, the CFO now has full real time visibility into all business spending. So you can look at one dashboard, and you can see what one IT manager is buying and your Zoom licenses in Australia. And you can see a person in the UK booking a flight, and you can see what someone in California is grabbing for lunch.
Deeper into fintech
We’ve been really lucky to have partners, technologies and softwares out there that just allow us to do these things a lot faster than if we were trying to do it ourselves. We’ve got Stripe that connects to a bank, and then is ultimately the issuer of the virtual cards and the physical cards. We’ve got companies like Creditsafe, which help us underwrite extremely quickly. We’ve got various companies like Plaid. So if an employee wants to expense something that they paid for on their personal card, it’s actually an amazing experience: you connect your bank account through Plaid, and then you just select which transactions were work related. Then we use Modern Treasury and we can pay you back within a day for your expenses.
We’re able to leverage all of these various types of fintech products to go to market a lot faster with a much better and seamless experience that allows us to do what we do best, which is to build amazing application layers and products for our customers to use.
We’re focused on growth. We’ve raised quite a lot of money, and we’re putting that toward developing products, hiring employees, and going global. What’s top of mind for me is completely automating expense management. That way, when an employee swipes a card, they don’t have to do anything. That’s not just on the employee side, that’s also for the manager and the finance team — we want to completely automate that.
The next thing we’re focused on building is really deep visibility and analytics on all business spend. That’s kind of the the second pillar of the way we look at our product and our priorities. Third, which we’re very focused on right now, is global. Stripe is able to issue cards globally and in different currencies, and we’re building our product to be able to emulate that and add on these various currencies. So euro is coming very soon. Also GBP soon, then Australia, New Zealand, and Canada — so continuing to expand our footprint globally with our partners.
Last is that piece we talked about around spot purchasing — just building and enabling a lot more decentralization of spend plus visibility and getting deeper into spot purchasing.