Brex is moving beyond corporate cards for startups. The San Francisco-based startup, which is valued at $2.6 billion, launched a cash account on Thursday as an ecosystem play and a source of data to improve underwriting.

Brex provides credit cards for tech entrepreneurs, as well as e-commerce and life sciences startups. Through the cash account, called Brex Cash, the company aims to scale with clients as they grow. The cash account provides a new line of sight into clients’ spending and cash flow, which provides data that Brex will use to improve its credit card underwriting efforts. Brex hopes the cash account will create lasting relationships with customers who want a single platform to manage all their payments.

The cash account product can bring business customers into its ecosystem early on, explained Michael Tannenbaum, chief financial officer at Brex. The product functions like a checking account that customers can use for ACH transactions and wire transfers. The funds in the account, however, are invested in a money market mutual fund managed by Dreyfus, a BNY Mellon-owned fund.

The account offers 1.6% APY and points-based rewards for business expenses, such as transportation, restaurants and recurring software payments. Brex customers can manage the cash account through the same online dashboard as their corporate credit cards. Having the cash account and credit card on the same platform creates a one-stop payment solution for startups, Tannenbaum said. For now, the cash account is only open to Brex cardholders, but he noted that the company hopes to open it to non-cardholders early next year.

Brex, which has raised $315 million in equity funding since its establishment in 2017, uses a variety of data sources to underwrite customers, including cash flow, sales volume, venture capital funding and cash burn rates. Brex can tell when a client will go out of business and can intervene before that happens, according to the company. It generates revenue from interchange fees generated from customer transactions.

Because the company is only two years old, however, it hasn’t faced an economic downturn that could add risks to its business model. “Silicon Valley can turn quickly and, if that bubble bursts and the market pops, it will be an interesting exercise for Brex,” Michael Noble, founder and CEO of the business-to-business credit company Apruve, told the New York Times last year. In addition, with the launch of the Stripe Corporate Card in September, the company faces new competition.

See also: Brex launches corporate card for biotech, life sciences firms

Brex has been developing the cash account for about a year. Its banking partner is Boston-based Radius Bank, which works with other fintech startups including MaxMyInterest and Stackin. Brex acquired digital payments company Elph in March, and the Elph team played a major role developing the cash account product, according to Tannenbaum. Brex is marketing the cash account through referrals and partnerships with companies its customers often use, such as Amazon Web Services. 

Gilles Ubaghs, a senior analyst at Aite Group, told Bank Innovation in an email that Brex’s plan to fund money market accounts with startup cash was clever. “Are these revenues enough to offset the costs of the rewards, interest rates, and free payments?” he added. “It seems like those would add up and could prove problematic were the markets to turn.” 

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