Remittances from American workers to their families and friends in Latin America reached $155 billion in 2023. Faced with such an opportunity, banks, money transfer companies, retailers and fintechs are all trying to make transfers more convenient on both sides of the transaction. .
Fast-growing startup Félix Pago is one such player and recently raised a $15.5 million Series A round to expand its presence in Latin America and the United States, TechCrunch has exclusively learned . Its main interface is WhatsApp, with a chatbot that makes it easy to send and receive cross-border money transfers, even with a voice message.
“I like to say that WhatsApp is the region’s operating system, so it makes sense that we build something on top of WhatsApp to make it extremely simple,” CEO Manuel Godoy told TechCrunch.
WhatsApp itself already allowed peer-to-peer transactions and the ability for users to pay businesses over chat, but only in Brazil and India. But a wider rollout wouldn’t be bad news for Félix and similar solutions like BidSend, Leap Financial and Zapp: If users could use their card on WhatsApp, payouts would be just a click away, Godoy says.
Meta currently seems to view these third-party developments favorably. His WhatsApp for Business blog highlights the use case of Nicaragua’s LAFISE Bank, which created a virtual assistant in WhatsApp to facilitate remittances.
But Félix Pago has a broader field of action. Aside from WhatsApp, which they already have installed, “users don’t need to download any apps,” Godoy said. On the US side, users complete most transaction details via the WhatsApp chatbot; Only at the last step do they have to click on a link to securely fill in their debit card information. On the other hand, money can be collected instantly in local currency in the form of bank deposit, but also in cash at a store.
Recipients often prefer cash, so Félix Pago has adapted to this reality and formed partnerships to have cash pickup locations in Mexico, Guatemala and Honduras. For $1.99 more, “the sender receives a receipt with a unique identification number and sends that receipt to the recipient to show the cashier so they can collect the money.”
There’s a lot more going on behind the scenes, thanks to the internal and third-party tools Félix uses to meet its obligations and optimize its operations. There is KYC, AML and fraud prevention; and there is crypto, Godoy said.
By using Circle’s USDC stablecoin, Félix Pago is able to make currency savings that he can pass on to users. The 24/7 availability of USDC also reduces Félix’s pre-funding needs, allowing it to make the first transaction for free, as competitors Remitly and Western Union do. Félix then charges $2.50 on subsequent transactions to Guatemala and Mexico, while it has opted for tiered pricing for Honduras. Overall, this makes the fees much lower than SWIFT transactions, which are also slower.
“Crypto is a powerful money transfer tool, but you have to abstract it from the user. The user doesn’t care. I always say it could be a donkey crossing the border, it doesn’t matter. What they want is money, local currency, and they want it instantly at the best possible price. And cryptography enables this on the backend.
Given that Félix relies on USDC and its crypto partners, Godoy believes the domain expertise of its new lead investor, Boston-based crypto fund Castle Island Ventures, makes it a welcome addition to its roster. capitalization. “We already leverage some of their wallet companies to make our infrastructure more robust, and one of their partners, Nic Carter, is one of the leading experts in USDC (and) stablecoins, so I think this gives us gives a lot of leverage. .”
Switch Ventures, the fund that led Félix’s 2023 pre-seed expansion round, also participated again, as did investors who participated in its previous $2.5 million pre-seed round , including HTwenty, Contour and MELI Capital, the corporate venture capital arm of Latin American e-commerce giant Mercado Libre, whose partnership with Félix gave the startup considerable momentum.
As part of this partnership, Mercado is promoting Félix Pago to users of its Mercado Pago payment platform in Mexico. These references represented 25% of its new users at the time.
A similar partnership with neobank Nubank followed, giving further impetus to Félix’s growth. “The cool thing is that today we’re still growing about 30% month over month, but it’s not just because of these partnerships,” Godoy said.
SEO is its main growth driver, but the company also relies on influencer marketing and Facebook to raise awareness among its target audience in the United States. So far, most of its users are blue-collar Latinos working in construction, food and home services.
This makes Godoy confident that Félix will remain complementary to Nubank and Mercado Libre, even as the latter expands its fintech projects. (He is reportedly seeking a banking license in Mexico.) “They don’t have a product in the United States, so ultimately the shipper is a customer of Félix Pago.”
Félix Pago also hopes to help these customers with more than just remittances. “The vision we have for Felix is to become the trusted companion of Latino immigrants in the United States. » His roadmap includes a credit building program and, eventually, real credit.
However, the startup will first use its new funding to expand into El Salvador and Nicaragua, followed by the Dominican Republic and Colombia, and then the rest of Latin America. This is a necessity if Félix wants to advance further on its roadmap and have an advantage over other companies aiming for the same position.
“To become that trusted companion of Latinos in the United States, we need to solve the (remittance) problem for all Latinos,” Godoy said.
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