The Bankwatch

Tracking the consumer evolution of financial services

Expensify is a good example of re-defining payments

In keeping with the payments theme, here is a classic interpretation.  Give the product for free and charge for the value at the point of interaction.  In this case a 3% fee on transactions.  In return the user gets the reporting, and a “web-based expense manager and uses cellphone cameras to upload pictures of receipts to match against purchases”.

Netbanker:  Expensify Launches Decoupled Credit/Debit Card Using Prepaid Model

To cover the extra interchange and create some revenue for itself, Expensify levees a 3% transaction fee on the cardholder. Although, the card is otherwise relatively fee-free, that’s a significant surcharge.

Why would anyone pay 3% extra in order to use the Expensify card when they already have a credit card? The company believes that small businesses will pay the fee in order to get the expense manger features and to help employees separate business expenses from personal ones. Businesses could have multiple Expensify cards tied to different category of expenses.

A business with just $1000/mo in expenditures would pay $360 per year. In addition, the business would tie up several hundred dollars in a prepaid account because cardholders can only make charges that do not exceed the prepaid balance held in the Expensify account.

Relevance to Bankwatch:

I agree with Jim that its expensive, but the model has appeal. It matches the cost to the value perceived.  Its a good start.

Written by Colin Henderson

September 13, 2008 at 22:16

Posted in Payments

3 Responses

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  1. Hey there, thanks for the kind words! We pitched this thing 150 times at the TechCrunch 50 last week (where it won 2nd place over 100 other companies), and while the 3% was definitely a point of concern for some people, there was overwhelming enthusiasm for the product from virtually everyone.

    On top of that, I think you’ll find using Expensify actually saves you more than the 3% it costs:

    We’ve found about 5% of all reimbursable expenses never get reimbursed because people lose their receipts before filing the report. If we can capture just 1 in 30 of those receipts, w can pay for ourselves.

    Similarly, paper expense reports generally take 3 weeks or more to get reimbursed. If we can tighten that up and get you reimbursed before you pay any finance charges, we can pay for ourselves.

    And finally, we’ve found every $1000 in expenses takes about 45-60 minutes to file manually: if we can save you an hour and your time is worth over $30/hr, again, we pay for ourselves.

    Of course more important than the money we save is the *time* we save. And not just any time, we can cut out the hours you dread most: the hours you spend sifting through receipts and bills and Excel and so on.

    Anyway, we’re just getting ramped up so the proof will be in the pudding. Thanks for taking a look, and don’t hesitate to write me at if you have any questions!


    David Barrett

    September 13, 2008 at 23:48

  2. My question is: Who will actually pay the 3% — the employer or the employee? I guess the employee incurs the 3% on his or her card, but they could, in turn, expense that fee, right?

    That minor point aside, I think there’s a lot of potential here for small businesses looking to avoid the cost and hassles of issuing company credit cards.

    Ron Shevlin

    September 14, 2008 at 09:20

  3. @David … thanks for stopping by and well done at TechCrunch50! Good luck, and we’ll follow your progress.


    September 14, 2008 at 16:43

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