American Express hopes Kabbage acquisition will make it a go-to resource for small businesses seeking cash flow, payment and financial management tools.
American Express announced on Aug. 17 its intention to buy Kabbage, a fintech company that offers cash flow management tools to small businesses.
American Express said in a news release it aims to become a go-to resource for small businesses seeking cash flow, payment and financial management tools.
The sale will also enable Amex’s customers to use Kabbage’s platform, which uses real-time data processing to help small businesses with every aspect of their cash flows, including working capital product offerings. The deal is expected to close later this year.
How Kabbage fits into Amex
Ted Rossman, industry analyst at CreditCards.com, said American Express’s acquisition makes a lot of sense.
“American Express is a big advocate for small businesses — from its annual Small Business Saturday initiative to its Shop Small promotion and efforts to achieve acceptance parity with Visa and Mastercard by expanding into more small business locations,” Rossman said.
While all of those programs help small businesses, Rossman explained, they are more focused on the cardholder.
For example, Amex is giving cardholders bonus points and cash back for shopping locally on Small Business Saturday or with the Shop Small initiative (of course, the retailer benefits from the sales, too).
The Kabbage acquisition extends Amex’s relationship directly with small businesses and builds upon this existing framework, he added.
“It could provide a virtuous cycle at a time when many small businesses are in need of additional funding, and the fact that they already accept American Express cards and trust the company could make them more likely to apply for a loan from Kabbage,” Rossman said.
Additionally, Kabbage’s cutting-edge technology is a major asset for Amex.
See related: Best business cards
Amex will acquire everything Kabbage
American Express will acquire Kabbage’s team as well as its “suite of financial technology products, data platform and IP built for small businesses,” according to the news release.
Kabbage’s product line includes:
- Flexible lines of credit
- E-gift certificates
- Cash flow visualization tools
- Online bill payment
- The ability to consolidate funds through a business checking account
See related: How to open a merchant account
Kabbage and Amex have high hopes
Executives at American Express and Kabbage expressed their high hopes regarding the acquisition.
“This acquisition accelerates our plans to offer U.S. small businesses an easy and efficient way to manage their payments and cash flow digitally in one place, which is more critical than ever in today’s environment,” Anna Marrs, president of global commercial services at American Express, said in the Aug. 17 news release.
Kabbage CEO and co-founder Rob Frohwein added, “We have built a technology and data platform that provides [small businesses] with the kind of capabilities and insights often reserved for larger businesses. By joining American Express, we can help more small businesses succeed with a fully digital suite of financial products to help them run and grow their companies.”