Buy now, pay later services have become so ubiquitous that BNPL might as well be another way of saying “debt.” But in Mexico, where the BNPL platform Aplazo operates, a large underbanked population makes BNPL an alternative to cash.
The four-year-old Mexican fintech startup facilitates split payments to offline and online merchants, even when the buyer doesn’t have a credit card.
For end users, Aplazo offers a virtual card that allows them to buy now and pay later in many stores. A recent $45 million Series B round led by QED Investors should help it further expand its reach, both virtual and physical.
Although BNPL is often associated with online merchants, e-commerce is still limited in Mexico and Aplazo says in-store transactions account for more than half of its business. Offering this option is a way for stores to increase sales and retain customers, and it seems to be working: the company says its revenue has tripled over the past year.
Mike Packer, partner in charge of Latin America at QED, highlighted Aplazo’s progress to date in a conversation with TechCrunch. “The network and products they have built present a huge competitive advantage. They were able to carry out very many transactions, a significant amount of data, relationships with almost 10,000 merchants… All of this continues to get worse over time.
The company has also been able to use data and technology to limit credit losses despite its growth, Aplazo CEO Angel Peña told TechCrunch. “It’s embedded in the DNA of the entire organization and it’s something that has brought tremendous efficiencies over the last year. As a reminder, we have halved our delinquency rates while (during) the same period we have more than tripled our activity. This was entirely possible due to our ability to use AI to guarantee every transaction.
Unlike in the United States, Aplazo cannot always rely on its credit history; according to the company, 40% of its users do not have one. This makes Mexico difficult for international BNPL players to enter, even when they have a strong market position in other countries, as Affirm or Klarna do.
However, Aplazo has competitors in Mexico, such as Kueski, another BNPL provider, which recently partnered with Amazon. Others, like Fintoc, a Colombian account-to-account payment startup, are taking a different approach, but with the same goal of reducing transaction fees and friction for merchants.
For Aplazo, BNPL feels more like a means to an end, a springboard for greater fintech ambitions.
“Our vision is to become the preferred payment method in Mexico; and because of our position in the market, where we serve underserved users and work with underserved merchants, we see many opportunities to expand relationships with merchants and consumers to create more value for them” , Peña said.
However, the company is growing cautiously and claims to be close to cash balance over the past two months with a stable headcount of 130 people. “We are very aware of the efficiency of the business,” Peña said.
This also aligns with what venture capitalists want to see these days, and likely explains why Aplazo was able to raise a large sum and increase its valuation despite the current environment.
Brazilian VC Andre Maciel, whose company Volpe Capital participated in the round as a new investor, said in a statement that “Aplazo’s growth profile and the economic characteristics of the unit not only allow the company to stand out from all the other peers we’ve seen in the region, but also to stand out comfortably. position the company for self-funded growth in the future.
Existing investors Oak HC/FT, Kaszek and Picus Capital also participated in the round, which adds to the bridge funding the company has raised since its $27 million Series A in 2021. In total, the company has obtained $100 million in equity and $75 million. in committed debt.
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