Is Amex’s Center Acquisition Purely an SME Play?

In a move that surprised some industry insiders, American Express has reached an agreement to acquire payment and expense technology provider Center, with plans to "create a seamless expense management platform" combining Center's software and Amex's corporate and small business cards, the company announced earlier this month. Financial terms of the agreement were not disclosed. 

Center, co-founded by Concur co-founder Steve Singh, launched in 2017 and is a part of Singh's corporate travel investment empire, via his investment group Madrona Ventures, that includes Spotnana, Troop and, as of last year, travel management company Direct Travel. In a blog post, Center co-founder and CEO Naveen Singh, Steve Singh's son, said the acquisition fit the company's "vision" that "card and expense should be deeply connected." 

"By combining our best-in-class expense management technology with Amex’s leading commercial card products, together we have a unique opportunity to deliver the next generation of commercial cards for small to medium-sized companies," Naveen Singh said in the blog post. "As we move forward, we are focused on ensuring a smooth transition and building on our shared commitment to making expense management simpler and more effective for businesses and employees alike." 

With the acquisition, which has a target closing of the second quarter of this year pending customary closing conditions, American Express said it would provide "an integrated card and expense management solution" through Center's technology. An Amex spokesperson said the company is not yet sharing further information on integration plans, as details will continue to be worked out following the agreement being reached. Center's payment solution currently is powered by the Mastercard platform. 

In a broad sense, the strategy behind the acquisition is clear, as it gives American Express a proprietary platform, in addition to the partnerships it has developed over the years, for an integrated expense offering, positioning it to compete with rising fintech companies such as Brex and Ramp. In a written analysis of the acquisition, Mesh CEO Oded Zehavi said the selection of Center to fill that role was a little puzzling in light of more "natural" acquisition targets such as Extend and Airbase. 

"Unlike Ramp and Brex, which dominate the spend management space with significantly larger operations, Center was relatively small—10 to 20 times smaller—lacked technological sophistication and had minimal traction in the lucrative tech and high-growth startup segments," Zehavi said. "Instead, it primarily catered to underdeveloped markets that bigger players ignored." 

Zehavi speculated that the sale of Center would enable Direct Travel to build or partner with "a more robust player" as an expense platform, strengthening its position against Navan and TravelPerk in offering an integrated travel and expense platform. 

In BTN's Intelligence News Desk earlier this month, Festive Road CEO Caroline Strachan said she was "quite disappointed" upon hearing the acquisition news, thinking it would disrupt the "beautiful new ecosystem" among the Madrona technologies. 

"I kept thinking of the Madrona investments as the Salesforce of travel management, where they were creating this ecosystem of different players," Strachan said. "I wonder if the American Express acquisition piece is to own the [small and midsized enterprise] marketplace. As a small business owner, I love it as a product and can see how it would help me in our world." 

A Center spokesperson referred questions as to what the acquisition meant for partnerships to American Express. Steve Singh, however, indicated to BTN that Center would still have a place in that ecosystem. 

"As far as we are concerned at Spotnana, our relationship with Center will only get better and stronger," Steve Singh said in a statement to BTN. "The combined value proposition for customers just improved."