Buy now, pay later services have become so popular that BNPL may just be another way of saying “debt.” However, in Mexico, where the BNPL platform Aplazo operates, BNPL has become something of a cash substitute due to the large number of unbanked people.
A four-year-old Mexican fintech startup facilitates installment payments to offline and online sellers, even if buyers don't have a credit card.
Aplazo offers end users a virtual card that allows them to buy now and pay later at many stores. His recent $45 million Series B round led by QED Investors should help further expand its reach in both virtual and physical.
Although BNPL is often associated with online retailers, e-commerce is still limited in Mexico, and Aprazo says in-store transactions account for more than half of its business. Offering this option is a way for stores to increase sales and loyalty, and it seems to be working. The company reports that its revenue has tripled over the past year.
Mike Packer, QED's partner for Latin America, highlighted Aplazo's progress to date in a conversation with TechCrunch. “The network and product they have built has a huge competitive advantage. They have been able to have a huge number of deals, a huge amount of data, and relationships with almost 10,000 merchants. … All of this continues to become more complex over time.”
Aplazo CEO Angel Peña told TechCrunch that despite its growth, the company has also been able to use data and technology to limit credit losses. He said, “AI is embedded in the DNA of the entire organization; [brought] Amazing efficiency last year. For reference, we have cut our delinquency rate in half. [during] Over the same period, our business more than tripled. This was definitely possible as AI could be used to underwrite each trade. ”
Unlike in the US, Aplazo cannot always rely on your credit history. According to the company, his 40% of users have nothing. This makes it difficult for foreign BNPL players to enter Mexico, even if they have strong market positions in other countries, such as Affirm and Klarna.
However, Aplazo has competitors in Mexico, including Kueski, a fellow BNPL provider that recently partnered with Amazon. Other companies, such as Colombian account-to-account payments startup Fintoc, are taking different approaches, but with the same goal of reducing transaction fees and merchant friction.
For Aplazo, BNPL sounds more like a means to an end, a stepping stone to grander fintech ambitions.
“Our vision is to become the preferred payment method in Mexico, serving underserved users and working with underserved merchants. Given our position in the market, we believe there are many opportunities to expand our relationships with both merchants and consumers to create more value for them,” Peña said.
But the company has been growing cautiously, with a stable headcount of 130 people and claims to have approached cash flow break-even in recent months. “We are very conscious of the efficiency of our company,” Peña said.
This is also in line with what VCs want these days, and perhaps explains why Aplazo was able to raise a large round and increase its valuation despite the current climate. It will be done.
Andre Maciel, a Brazilian venture capitalist whose Volpe Capital participated in the round as a new investor, made the following judgment in a statement: Position the company for future self-funded growth. ”
Existing investors Oak HC/FT, Kaszek and Picus Capital also participated in the round, which is in addition to the bridge funding the company has raised since raising $27 million in Series A in 2021. be. In total, the company secured $100 million and $75 million in equity. I have debt with a commitment.