Fintech
Aplazo is using “buy now, pay later” as a springboard to financial ubiquity in Mexico
“Buy now, pay later” services have become so ubiquitous that BNPL could do it too just be another way of saying “debt.” But in Mexico, where the BNPL platform is located Aplazo work, a great one unbanked population makes BNPL more like a cash alternative.
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 at many stores. A recent $45 million Series B round led by QED Investors should help it further expand its reach, both virtual and physical.
While 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 loyalty, and it seems to be working: the company says its revenue has tripled in the last year.
Mike Packer, the partner in charge of Latin America at QED, highlighted Aplazo’s progress to date in a conversation with TechCrunch. “There is a huge competitive advantage in the network and product they have built. They were able to have tons of transactions, a significant amount of data, relationships with almost 10,000 merchants… This continues to compound 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. “The AI of the entire organization is embedded in the DNA and it’s something like this [brought] extraordinary efficiency in the last year. For context, we have cut our default rates in half [during] In the same period, we have more than tripled the business. This was certainly possible thanks to our ability to use artificial intelligence to underwrite every transaction.”
Unlike the United States, Aplazo cannot always rely on credit history; according to the company, 40% of its users have none. This makes Mexico difficult for international BNPL operators 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 fellow provider BNPL Kueskithat recently collaborated with Amazon. Others, like Fintoc, Colombian account-to-account payments startupthey are taking a different approach, but with the same goal of reducing transaction fees and friction for merchants.
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; and because of our position in the market, where we serve underserved users and work with underserved merchants, we see many opportunities to broaden the relationship with both merchants and consumers to create more value for them,” said Peña.
However, the company is growing cautiously and says it is close to breaking even on cash flow over the past two months with a stable headcount of 130 people. “We are very aware of the efficiency of the company,” Peña said.
This is also in line with what VCs want to see these days, and probably explains why Aplazo managed to raise a large round and increase its valuation despite the current environment.
Brazilian VC Andre Maciel, whose company Capital Fox participated in the round as a new investor, judging in a statement that “Aplazo’s growth profile and unit economics not only make the company stand out among all other competitors we have seen in the region, but comfortably position the company to ongoing self-financed growth forward.”
Existing investors Oak HC/FT, Kaszek and Picus Capital also participated in the round, adding to the bridge financing raised by the company since its founding. $27 million Series A in 2021. In total, the company has secured $100 million in equity capital and $75 million in committed debt.