Anderson Chamon, co-founder and vice president of Products and Technology at PicPay
Anderson Chamon, co-founder and vice president of Products and Technology at PicPay. Photo: Andressa Freitas/Courtesy.
Business

The next steps of PicPay, the largest digital wallet in Latin America

With more than 41 million users, the Brazilian app is launching a messaging service and a P2P lending scheme on February

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More than 41 million Brazilians are using PicPay – the app added almost 25 million in 2020, the year of the novel coronavirus pandemic. Over the past year, the company processed BRL 49.6 billion in payments. These are numbers that make PicPay the largest digital wallet in Brazil and Latin America. What comes next? Be a super app, a big ecosystem with a diversity of businesses. The launch of an in-app messaging service this month is another step in that direction.

Within the app, users could already share their activities and “follow” others when given the authorization to do so, but they didn’t interact. This social network side of PicPay will be strengthened with the messaging service and will complement the platform’s virtual store/marketplace strategy, which started three years ago.

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There are 70 brands selling products and services within the digital wallet, which today gains an average of 2 million new users every month. Over the past year, more than 25 million transactions were carried out within the marketplace, called the PicPay Store. The idea is to increase this number considerably in 2021. “Recently, we started the process of opening our platform, which will allow each seller interested in integrating into PicPay Store to develop a customized experience, providing a fast and structured growth,” says Anderson Chamon, co-founder and vice president of Products and Technology at PicPay, in an interview with LABS. An executive was hired to carry the marketplace to the next level: Fábio Plein, former general manager of Uber Eats in Brazil.

In addition to the messaging service and the marketplace strategy, PicPay bets on two more fronts of monetization and growth: advertising (the user base is already large enough to draw the interest of other brands, and as it grows, it makes it even more sense to bet in in-app advertising); and, of course, financial services, with possibilities that go well beyond payments.

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“Our financial services front also allows the company’s profitability through tariffed services, although most of the solutions we provide on the platform are free. Likewise, the proposal is that the other action fronts – PicPay Store, Social and Ads – find a balance between the different existing formats for monetization, following each company’s own business strategy “, points out Chamon.

Earlier this year, to attract more users and make them actually use the wallet (about half of PicPay’s users are really active users), PicPay increased deposit yields from 100% to 210% of the CDI (a daily average of overnight interbank loans that is used as an investment benchmark in the Brazilian financial system). This move also means that PicPay is taking its first steps towards investment services.

In January, the company said it had reached the milestone of 2 million credit cards issued to its users. The cards bear the PicPay brand but are actually from Banco Original, a neobank that became a partner in 2015 and has 22.70% of the business. The other controlling shareholders of PicPay are J&F Participation (from the J&F group that also owns Banco Original), with 9.66% of the company, and José Batista Sobrinho, founder of the giant agribusiness JBS that gave rise to the J&F group, with 67.64%.

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Also in February, Chamon said PicPay would launch its first credit product. As revealed by the company’s CEO, José Antônio Batista, to the business news portal Neofeed, it will be peer-to-peer lending, a loan from one user to another. “To continue to grow steadily and in an orderly manner, we are going to bet on the development of our ecosystem, both in the financial sector and in the other fronts in which we operate,” says Chamon to LABS.

The company does not reveal its target TPV for 2021. But whatever the number, capital to get there the company has. In February, the Central Bank approved a BRL 259 million capital increase in PicPay; now, it has a BRL 841.246 million capital. The amount came from an investment by the J&F group. In three years, the company expects to reach 100 million users.

An increase in this level will also require hiring more talents, mainly for its tech areas. “There are more than 2 thousand employees and, of this total, 1 thousand work in technology. By the end of the year, we will have 3.5 thousand employees, and 2.5 thousand will work in technology. We are part of a robust holding company, and we understand that the moment current is to focus efforts on our own growth,” adds Chamon.

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What is PicPay, how it works?

Basically, PicPay is a digital wallet app that, among other things, enables users to send and receive money, pay bills, store loyalty cards, and discount coupons. And it’s not just the number of users that has grown absurdly. The number of businesses that accept PicPay as a payment solution is also growing: there are 1.4 million that accept PicPay’s QR Codes, and more than 3.5 million businesses that accept PicPay payments via their POS terminals from Cielo, Rede, and Getnet – the three largest acquirers in the country.

It is by looking at this audience that PicPay also wants to expand its financial services. The anticipation of receivables and loans for working capital are products in the company’s pipeline for corporate customers.

How PicPay works? Well, as any other digital wallet, but with a Brazilian experience. Users can register credit cards or add money from their checking account to the app’s wallet. At the same time, they can also pay a boleto bancário (a type of cash voucher or bank slip that Brazilians use to pay bills and purchases) and, now, make instant payments through PIX, Brazil’s instant payments system that debuted last November. Some months before that, in September, the company announced the PicPay Card, a digital card that promises 5% cashback – something that the company is also thinking of offering along with the ads strategy.

PicPay international plans

As already mentioned, PicPay is today the largest digital wallet in Latin America. PicPay international strategy, however, is not clear yet. When asked about the company’s plans for Latin America, Chamon says that, for now, the company’s focus is Brazil. “We will always be attentive to the company’s growth opportunities, but at the moment, our focus is on developing the Brazilian operation,” stresses Chamon.

After this story was published on Friday, the newspaper O Estado de S.Paulo released behind the scenes information about the hiring of BTG Pactual for coordinating the company’s future IPO process. PicPay did not comment on the matter to the newspaper.

A week ago, Chamon told LABS that “IPO can be a natural path for technology companies with strong growth, such as PicPay. But we don’t talk about it at the moment, and the same is true for the issue of acquisitions. Our main focus continues to be the development of the operation and the company’s growth. “