Mexican BNPL challenger Aplazo raises $5.25 million Kaszek-led round

In the wake of Afterpay acquisition, Mexico's Aplazo wants to raise the bar of BNPL's competition in Latin America

04.Aug.2021 14:21 BRT

Mexico-based Aplazo, an Afterpay-like fintech in Latin America, announced on Wednesday that it has closed an equity financing round of $5.25 million led by Kaszek, with participation from previous investor Picus Capital and globally experienced Buy Now Pay Later (BNPL) investor Woodson Capital.

The growth of the BNPL market has recently attracted the attention of heavyweights like Apple and Goldman Sachs, and features great companies like Klarna, PayPal, and Affirm. The model is also on the spotlight after Square, the payments firm of Twitter‘s co-founder Jack Dorsey announced it is acquiring the famous Australian fintech Afterpay for $29 billion.

Afterpay has been the thermometer of the BNPL firms worldwide, and its deal also made rivals’ shares rose.

As LABS has shown, unlike a credit card or a line of credit issued by a bank, BNPL lets consumers pay for purchases via short-term loans that most often have no interest fees for shoppers.

These microloans are approved at the time of purchase, and there are two primary ways of borrowing. The first is a point-of-sale loan, in which a BNPL provider partners with merchants to offer financing at checkout. The other is an installment plan that lets people buy online and pay for their items in a predetermined number of installments. Both involve a credit-validation step that is typically managed by the BNPL service provider. The loans are frequently interest-free for customers if they are paid on time. For other transactions an interest charge may be applied up front.

BNPL service providers make their money on the transaction fees charged to merchants, but in return, merchants benefit from reaching more customers, increased cart conversions and higher sales volumes. BNPL providers also validate the customer’s ability to pay through their own soft credit check or underwriting process, taking most of the risk of non-payments and fraud off the merchant’s shoulders.

Aplazo’s way in Latin America

Aplazo’s local rivals include Colombian Addi, that recently raised a $65 million round to fund its launch in Brazil, where it established an office this year. The startup has its eye on Mexico as well. Nelo, a fintech founded by former Uber execs, also raised a $3 million Seed round led by Homebrew to fight in Mexico’s BNPL market. Kueski and Alchemy are also fighting to capture these market share betting on the recurrence of its customers and partnerships with merchants.

Aplazo was founded in December 2020 by Angel Pena, who used to manage emerging market credit portfolios at Morgan Stanley in New York, and Alex Wieland, who spent led operations and sales teams at Uber, Lime Scooters and Oyo in Latin America.

“Mexicans previously required a credit card for installment purchases, representing a significant roadblock for broad adoption given that only 11% of the population has a credit card,” said the fintech.

Aplazo has partnered with over 400 merchants and will use its seed round to onboard additional merchant partners and launch new product features before expanding across Latin America. The company is currently compatible with most e-commerce platforms, such as Shopify, Magento, Tiendanube, WooCommerce, Prestashop, and VTEX. Merchants can also offer Aplazo as a payment option in retail stores.