Does Ramp differ from Brex in terms of their card processing platform features?

Guest: Brex would tell you that, in order for them to scale, all these guys are trying to verticalize as much as possible. That's why you see bank people like Varo buying banks so they could get an extra four basis points. That's why they buy the bank, not because they actually care about the bank.

In this case, Brex building their own issuing processor in-house makes a lot of sense because that means they could save cost. The next step is, I don't know how much they pay Emigrant Bank, but they continue squeezing economics down for Emigrant Bank.

And if they can't do that, Emigrant Bank says, no, they're going to think about going to another bank as a sponsor bank or buying a bank. But Brex doing all these things I can guarantee you that beyond the economics, they could say, "Okay, we tried Galileo for transaction fraud scoring. And we realized that their solution is really not that good and they're misclassifying or their classifications. We don't agree with or they're too fringe and for our partner banks. So there were lots of false positives for fraud. And we don't want to use them." Okay. So what do you use? Well you have I2C. You don't really have more at your scale.

You can't go to first data, Fiserv, et cetera. Then you build your own, right? So you take that flow when you're like, okay, I'll do my own transactions for monitoring. Then there's authorization and clearing. They might say Galileo's API for this is really not that good. Our developers don't like it. We have a very hard time integrating it. And so what, we'll do that ourselves.

The biggest piece of costs for Ramp in the entire life cycle of opening an account for someone is printing the card. Physical card printing. That's 80% of the cost of opening the account after that 20% is just like monthly maintenance costs for that account.

If Brex can acquire a printer, then all of a sudden, they start verticalizing and they rely less and less on other people. Brex is building something very good for authorizations, for payments, for transaction fraud scoring, portfolio reporting. And so they can outsource that and they can charge for it on an API call or whatever else. But that essentially, starts competing with Galileo.

So that's where I think the interesting part about the Brex and the Ramps is how much we could build internally and then minimizing what you rely on third-party infrastructure for, because everything costs.