Buy now pay later services have become so widespread that BNPL might just be another way of saying “debt”. But in Mexico, where the BNPL platform Aplazo works, a big one underbanked population makes BNPL more like an alternative to cash.
The four-year-old Mexican fintech startup facilitates fractional payments to offline and online merchants even when the buyer does not have a credit card.
To end users, Aplazo offers a virtual card that allows them to buy now and pay later at multiple stores. A recent $45 million Series B round led by QED Investors will help it further expand its reach, both virtual and physical.
While BNPL often ties up 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 one way for stores to increase sales and loyalty, and it seems to be working: The company reports that its revenue has tripled in the past year.
Mike Packer, the partner in charge of Latin America at QED, highlighted Aplazo’s progress to date in a conversation with TechCrunch. “There’s a huge competitive advantage in the network and the product they’ve built. They’ve managed to have lots and lots of transactions, a significant amount of data, relationships with almost 10,000 merchants… All of that just keeps getting 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. “The whole organism has artificial intelligence built into your DNA and it’s like that [brought] tremendous efficiency in the last year. For context, we cut delinquency rates in half [during] in the same period, we have tripled the business. This was certainly possible because of our ability to use artificial intelligence to handle every transaction.”
Unlike the US, Aplazo cannot always rely on credit history. according to the company, 40% of its users have none. This makes Mexico difficult for international BNPL players to enter, even when they have a strong market position in other countries, such as Affirm or Klarna.
However, Aplazo has competitors in Mexico, such as fellow provider BNPL Kueski, which recently collaborating with Amazon. Others, such as Colombian Fintoc account-to-account payments startupthey take 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 bigger 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 partner with underserved merchants, we see many opportunities to expand the relationship with both merchants and consumers to create more value for them,” Peña said.
However, the company is growing cautiously and claims to be close to cash flow upside for the past two months, with a steady headcount of 130. “We are very conscious 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 was able to raise a large round and increase its valuation despite the current context.
Brazilian VC Andre Maciel, whose firm Volpe Capital joined the round as a new investor, opined in a statement that “Aplazo’s growth profile and unit financials not only make the company stand out among all other peers we’ve seen in the region, but also comfortably position the company for self-financed growth in the future.”
Existing investors Oak HC/FT, Kaszek and Picus Capital also participated in the round, which comes in addition to bridge funding the company raised from its $27 million Series A in 2021. In total, the company has secured $100 million in equity and $75 million in committed debt.
