Aplazo uses buy-now-pay-later as a stepping stone to financial ubiquity in Mexico

Buy-now-pay-later services have become so ubiquitous that BNPL might as well just another way of saying ‘debt’. But in Mexico, where the BNPL platform is Applause it works, big one insufficient banking 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 customer does not have a credit card.

Aplazo offers end users 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 her further expand her reach, both virtual and physical.

Although BNPL often ties up with online retailers, 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 reported that its revenue has tripled in the past year.

Mike Packer, partner in charge of Latin America at QED, highlighted Aplaz’s progress so far in a conversation with TechCrunch. “There’s a huge competitive advantage in the network and the product they’ve built. They were able to have lots and lots of transactions, a significant amount of data, relationships with almost 10,000 merchants… It all adds up over time.»

The company has also been able to use data and technology to limit credit losses despite its growth, Aplaza CEO Angel Peña told TechCrunch. “The whole organization has AI built into your DNA and that’s something that has (brought) tremendous efficiencies in the last year. For context, we’ve cut our delinquency rates in half, while (during) the same period we’ve more than tripled our business. This was definitely possible due to our ability to use artificial intelligence to secure every transaction.”

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Unlike the US, Aplazo cannot always rely on credit history; according to the company, 40% of its users don’t have them. This makes Mexico difficult to enter for international BNPL players, 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 service provider BNPL Kueskiwhich recently joined together with Amazon. Others, such as Colombian account-to-account payments startup Fintocthey have a different approach, but with the same goal of reducing transaction fees and friction for merchants.

For Aplaza, BNPL sounds more like a means to an end, a springboard for 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 customers and work with underserved merchants, we see a lot of opportunity to expand our relationship with merchants and consumers to create more value for them,” said Peña.

However, the company is growing cautiously and claims to have been close to breaking even in the past few months with a steady headcount of 130 people. «We are very aware of the company’s efficiency,» Peña said.

It’s also in line with what VCs want to see these days, and likely explains why Aplazo was able to raise a big round and increase its valuation despite the current context.

Brazilian VC Andre Maciel, whose company The capital of Volpa participated in the round as a new investor, said in a statement that «Aplazo’s growth profile and unit economics not only make the company stand out from all the other competitors we’ve seen in the region, but also comfortably position the company for self-funded growth going forward.»

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Existing investors Oak HC/FT, Kaszek and Picus Capital also participated in the round, which comes in addition to bridging the company raised from its Series A of $27 million in 2021. In total, the company secured $100 million in equity and $75 million in debt.

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