Aplazo takes in $27M to increase adoption of BNPL in Mexico

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Four months after securing $5.25 million seed round, Mexican Buy Now, Pay Later startup adjournment is back with an even bigger round to expand adoption of the payment plan approach across the country.

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Angel Pea and Alex Weiland co-founded the company in 2020. Prior to Appalazzo, Pea lived in New York and invested in credit in Mexico at Morgan Stanley, while Weiland was starting business in Latin America after spending time at companies such as Uber. Lemon.

Applazo plugs into a merchant’s payment process, online or offline, and enables users to purchase items and pay in five equal installments without the need for a credit card.

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That offline component, in particular, Pea says sets the company apart from competitors, as 95% of purchases are still done offline in Mexico. Generally, you need to have a credit card to avail the installments. Although credit penetration is low in Mexico, less than 10%He said that because of lack of trust in the banking system. The more popular payment methods are still cash or a Debit Card,

“This means 90% of people are unaware,” Pea told Nerdshala. “There’s huge adoption for this, but the constraints are banks that have been super profitable, but haven’t democratized installment credit.”

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Merchant is charged for using the Equipment, but the customer is not, and Alplazo bears the risk of installment payments and chargebacks. Merchants then benefit from increased conversion rates and higher average order values, while also maintaining consumer relationships.

With approximately 40% of the population having no credit history, Applazo uses alternative data, such as open banking and telecom data, to assess the creditworthiness and affordability levels of consumers, optimize approval rates, and reduce the number of consumers. To provide fair credit products, Pea said.

Today, they announced a $27 million Series A investment led by Oak HC/FT, with participation from existing investors Kaszek and Pickus Capital. This gives the company a total fund of over $35 million.

Pena says the new funding was unexpected because the company had substantial capital from its seed round. However, this opportunity gave the company an opportunity to accelerate its mission, which includes investing in technology and product development and merchant success. In addition, the company intends to double its 50-person team by February and launch in two additional countries in 2022.

Since the seed round, Apalazzo has grown its total processing volume by more than eight times and partnered with over 1,000 merchants dealing in lifestyle products such as fashion, footwear and beauty in less than a year. Pena estimates that these categories represent about $70 billion in spending in both online and offline purchases.

Apalazzo is the latest startup to go after the BNPL space, which has been dominated by companies like Afterpay, which was bought by Square, Klarna and Affirm earlier this summer. Over the past year, there has been a lot of activity with Afterpay between M&A and companies like ShopBack, which agreed to acquire Hulah, and funding rounds for BNPL companies. For example, Billy, Nelo and Scallope recently raised.

“We are fascinated by the global phenomenon that buy now, pay later,” said Oak HC/FT principal Alan Miller. “We wanted to invest in Latin America and thought buy now, pay later would be an interesting entry point. The industry has the same appetite as the US, but is on steroids, and limited access to the credit opportunity to buy now With Pay Later to succeed, Angel and Alex fit the mold.

Miller expects that the future of purchase now, pay later in Latin America will be bright for a few reasons: One, fewer millennials are getting credit cards and relying on debit cards instead. Second, merchants want to reach a large number of people, but cannot do so because of the large number of people who do not have access to credit. Applazzo is building an infrastructure around both of those elements and being able to “attract talent from the best brands, and when we saw that momentum, it was exciting,” he said.

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