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How Does Brex Make Money? Brex Business Model

Brex is a technology and financial services company founded by Brazilian entrepreneurs Henrique Dubugras and Pedro Franceschi in 2017 to solve debt and corporate expenditure problems in early-stage tech companies. It makes money with Brex Premium, an expansive suite of spend management and bill pay software tools, via interchange fees like most other financial technology companies and rewards schemes.

Origin Story

Brex is a technology and financial services company founded by Brazilian entrepreneurs Henrique Dubugras and Pedro Franceschi in 2017.

The pair met on Twitter as teenage boys and came together to win a local hackathon with something called AskMeOut – a Tinder-style app for matching Facebook friends.

Like many similar ventures of the time, however, the pair could not develop an efficient payment processing system.

Undeterred, Dubugras and Franceschi then founded Pagar.me – or the Brazilian version of Stripe.

The company was an instant success and was sold two years later in 2016 shortly before both enrolled in Computer Science at Stanford University.

There, they founded virtual reality gaming company Beyond, which gave them access to start-up accelerator Y Combinator.

However, both founders realized their interests lied elsewhere. Brex was founded soon after, ostensibly to solve problems around debt and corporate expenditure in early state tech companies.

The company was able to raise a significant amount of funding in the ensuing years. It became FDIC insured in 2020 and achieved integration with enterprise expense management platforms SAP and Xero.

In February 2021, Brex Bank was established allowing the company to offer loan products to individuals and businesses.

A recent $425 million capital raise has Brex now valued at $7.4 billion.

Brex revenue generation

Although Brex started as a humble credit service for tech start-ups, it now offers a host of other services. It now monetizes its business model in a few ways.

Brex Premium

Brex Premium is an expansive suite of spend management and bill pay software tools.

It is ideally suited to administrators who need to create expense policies, receive spending alerts, automate receipt and memo reminders, and incorporate employee request approval workflows. 

The service is free for the first 30 days, after which the company charges $49/month for unlimited users.

Interchange fees

Brex also collects money via interchange fees like most other financial technology companies.

When a customer makes a credit card payment, the card issuer – in this case Mastercard – collects an interchange fee and shares a portion of it with Brex.

Cashback

Brex also a rewards scheme, allowing participating businesses to maximize returns on spending and offset their expenses.

Points rewards are categorized in the following way:

  • Rideshare services – businesses receive 8 times the total purchase price in points.
  • Brex Travel – 5 times the total purchase price in points.
  • Restaurants – 4 times.
  • Recurring software – 3 times.
  • Everything else – double the total purchase price in points.

Customers earn points later redeemable at companies that create complementary products and services. These include Amazon AWS, Slack, Hubspot, Emirates, Singapore Airlines, and Zoom.

In all likelihood, Brex makes a commission for referring business to these companies.

Brex Cash

Brex Cash is an integrated cash management account for businesses linked with the Brex Card. This account links directly to Brex corporate credit card accounts.

Brex makes money sitting in its user’s cash accounts by lending it out to other financial institutions, otherwise known as net interest margin

Key takeaways

  • Brex is a Brazilian fintech company founded by entrepreneurs Henrique Dubugras and Pedro Franceschi in 2017. It was created to give early-stage tech companies better access to credit.
  • Brex revenue generation has since expanded from the early days of the company as a credit provider. Brex Premium is a monthly subscription service giving businesses access to spend management and bill pay tools. The company also earns money from an extensive cashback rewards scheme.
  • As an FDIC-insured banking institution, Brex can also collect net interest margin income from the funds sitting in user accounts.

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