AmEx, with a $92 billion market value, is the largest issuer of commercial cards in the world, and has relationships with almost two-thirds of the Fortune Global 500. It's also the largest issuer of cards to small businesses in the United States. "Obviously, AmEx has a massive stronghold," said Lisa Ellis, an analyst at MoffettNathanson. "I'd characterize the new players now as on the radar screen but not of concern to AmEx yet."

Brex, founded in 2017, started by introducing a product aimed at other startups. New companies, it said, often had a hard time getting traditional corporate cards due to their lack of credit history. Instead of credit histories, Brex monitors how much money its customers have in their bank accounts on a daily basis. If they're well-funded with cash on hand, Brex believes, they're likely to be able to pay off their credit card debt.

Brex.  Though Brex has gone after a relatively niche slice of the market, it wants to take on American Express directly. "We've always competed with AmEx," said Henrique Dubugras, Brex's 24-year-old co-founder. Dubugras and his investors, which include Peter Thiel and Kleiner Perkins Digital Growth Fund, believe tech-savvy competition could loosen the company's hold on the market. "We don't underestimate AmEx though. We're aware, we're measuring, we're looking."

Dubugras explained his company's strategy at a meeting earlier this year in a café Brex has leased and operates in San Francisco's South Park, a venture capital hub. Wearing a Brex-branded T-shirt, Dubugras said that while the bulk of its customers are startups, it's tried to make further inroads with e-commerce and life sciences companies. Even the café is an example of diversification.

Brex—which has raised about $317 million in venture capital funding, according to PitchBook data, and more in debt capital—had drawn some questions about its decision to dabble in food services. The café menu includes ingredients like "smoked grapes" and "béarnaise aioli." But Dubugras noted that American Express also operates lounges in airports, and Capital One Financial Corp. has cafés in a number of their branches. "We serve startups, and this is the core of the startup community in San Francisco, so having a lounge and café here made sense," Dubugras said. (The company poached the head chef from payment startup Stripe Inc.)

Ramp.  Brex is the one of the most valuable venture-funded card startups at the moment, but it's far from the only one. Ramp, based in New York, is only a year old and recently attracted about $25 million in funding from Founders Fund and others. In addition to offering corporate cards, Ramp can use payments data to find redundant spending at the companies it works with —such as extra software subscriptions or paying for separate document storage accounts. "Anyone at a large company can tell you that there is a lot of waste," said Ramp co-founder Eric Glyman, 29.

Divvy.  Based in Lehi, Utah, Divvy raised $200 million last April from New Enterprise Associates, Insight Partners, and others, and has secured millions more in debt capital. In addition to its corporate cards, Divvy offers additional expense tools that make it easier for employees and people in charge of a business's accounts to keep track of spending.

The AmEx Response

American Express has taken notice of the uptick in competition. "We definitely see these new startups," said Anna Marrs, president of the firm's global commercial services unit. "That reminds us that we need to keep innovating."

In October, American Express introduced a new card program made for startups. Like Brex, it has begun using technology that allows it to see a company's bank balance as part of its underwriting process. And the credit card giant is rolling out new systems for automating a small business's payments to suppliers—a process that normally involves writing checks and tracking down invoice information.

See also:

• Failure to Launch
• Future-Proof Your Payments Toolkit
• Improving Efficiency of Global Travel Sourcing
• Harnessing Analytics to Minimize Debit-Card Fraud

As credit card startups ascend, competition is working as intended, said Frank Martien, a managing director at Accenture. "We actually see a competitive answer from the large players," he said. That will ultimately mean more options for small companies, and more clashes ahead for American Express and its upstart rivals.

American Express may not be in a position to worry right now, but Dubugras predicts the day will come. "I don't think they like us very much," he said.

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