Enterprise

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

Comment

Image Credits: Jane0606 (opens in a new window) / Shutterstock (opens in a new window)

Four months after securing a $5.25 million seed round, Mexican buy now, pay later startup Aplazo is back with an even bigger round to expand adoption of the payment plan approach across that country.

Angel Peña and Alex Wieland co-founded the company in 2020. Prior to Aplazo, Peña lived in New York and worked at Morgan Stanley investing in credit in Mexico, while Wieland had been launching businesses across Latin America after spending time at companies like Uber and Lime.

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

That offline component, in particular, is what Peña says differentiates the company from competitors, as 95% of purchases are still made offline in Mexico. Typically, you need to have a credit card in order to take advantage of installments. However, credit penetration in Mexico is low, less than 10%, due to lack of trust in the banking system, he added. The more popular payment methods are still cash or a debit card.

“That means 90% of people are unaddressed,” Peña told TechCrunch. “There is huge adoption for it, but the roadblocks are the banks who have been super profitable, but have not democratized installment credit.”

Balancing risk: Modern architecture’s role in the BNPL playbook

The merchant is charged a fee to use the tool, but customers are not, and Alplazo takes on the risk of installment payments and chargebacks. The merchant then benefits from increased conversion rates and higher average order values, while also maintaining a consumer relationship.

Due to about 40% of the population not having a credit history, Aplazo uses alternative data, such as open banking and telecom data, to gauge consumers’ creditworthiness and level of affordability, optimizing approval rates and providing fair credit products to underserved consumers, Peña said.

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

Peña says the new funding was unexpected since the company had enough capital from its seed round. However, the opportunity provided the company a chance to accelerate its mission, which includes technology and product development and investing in 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, Aplazo grew its total processing volume more than eight times and in less than a year has partnered with over 1,000 merchants that operate in lifestyle products like fashion, footwear and beauty. Peña estimates these categories represent some $70 billion in spending in both online and offline purchases.

Aplazo is the latest startup going after the BNPL space that has been dominated by companies like Afterpay, which was bought by Square earlier this summer, Klarna and Affirm. There has been a lot of activity in the past year, between M&A with Afterpay and companies like ShopBack, which agreed to acquire Hoolah, and funding rounds for BNPL companies. For example, Billie, Nelo and Scalapay raised recently.

“We have been fascinated by the global phenomenon that is buy now, pay later,” Allen Miller, principal at Oak HC/FT, said. “We wanted to make an investment in Latin America and thought that buy now, pay later would be an interesting entry point. The industry has the same appetite as the U.S., but is on steroids, and with the limited access to credit opportunity for buy now, pay later to be successful, Angel and Alex fit the mold.”

Miller expects the future of buy now, pay later in Latin America to be a bright one for a couple of reasons: one, fewer millennials are getting credit cards and are instead relying on debit cards. Two, merchants want to access a whole swath of people, but can’t due to the large amount of people who don’t have access to credit. Aplazo is building an infrastructure around both of those elements and “has been able to attract talent from best brands, and when we saw that momentum, that was exciting,” he added.

Credit card and payments companies compete for a slice of the growing BNPL market

More TechCrunch

After Apple loosened its App Store guidelines to permit game emulators, the retro game emulator Delta — an app 10 years in the making — hit the top of the…

Adobe comes after indie game emulator Delta for copying its logo

Meta is once again taking on its competitors by developing a feature that borrows concepts from others — in this case, BeReal and Snapchat. The company is developing a feature…

Meta’s latest experiment borrows from BeReal’s and Snapchat’s core ideas

Welcome to Startups Weekly! We’ve been drowning in AI news this week, with Google’s I/O setting the pace. And Elon Musk rages against the machine.

Startups Weekly: It’s the dawning of the age of AI — plus,  Musk is raging against the machine

IndieBio’s Bay Area incubator is about to debut its 15th cohort of biotech startups. We took special note of a few, which were making some major, bordering on ludicrous, claims…

IndieBio’s SF incubator lineup is making some wild biotech promises

YouTube TV has announced that its multiview feature for watching four streams at once is now available on Android phones and tablets. The Android launch comes two months after YouTube…

YouTube TV’s ‘multiview’ feature is now available on Android phones and tablets

Featured Article

Two Santa Cruz students uncover security bug that could let millions do their laundry for free

CSC ServiceWorks provides laundry machines to thousands of residential homes and universities, but the company ignored requests to fix a security bug.

9 hours ago
Two Santa Cruz students uncover security bug that could let millions do their laundry for free

OpenAI’s Superalignment team, responsible for developing ways to govern and steer “superintelligent” AI systems, was promised 20% of the company’s compute resources, according to a person from that team. But…

OpenAI created a team to control ‘superintelligent’ AI — then let it wither, source says

TechCrunch Disrupt 2024 is just around the corner, and the buzz is palpable. But what if we told you there’s a chance for you to not just attend, but also…

Harness the TechCrunch Effect: Host a Side Event at Disrupt 2024

Decks are all about telling a compelling story and Goodcarbon does a good job on that front. But there’s important information missing too.

Pitch Deck Teardown: Goodcarbon’s $5.5M seed deck

Slack is making it difficult for its customers if they want the company to stop using its data for model training.

Slack under attack over sneaky AI training policy

A Texas-based company that provides health insurance and benefit plans disclosed a data breach affecting almost 2.5 million people, some of whom had their Social Security number stolen. WebTPA said…

Healthcare company WebTPA discloses breach affecting 2.5 million people

Featured Article

Microsoft dodges UK antitrust scrutiny over its Mistral AI stake

Microsoft won’t be facing antitrust scrutiny in the U.K. over its recent investment into French AI startup Mistral AI.

11 hours ago
Microsoft dodges UK antitrust scrutiny over its Mistral AI stake

Ember has partnered with HSBC in the U.K. so that the bank’s business customers can access Ember’s services from their online accounts.

Embedded finance is still trendy as accounting automation startup Ember partners with HSBC UK

Kudos uses AI to figure out consumer spending habits so it can then provide more personalized financial advice, like maximizing rewards and utilizing credit effectively.

Kudos lands $10M for an AI smart wallet that picks the best credit card for purchases

The EU’s warning comes after Microsoft failed to respond to a legally binding request for information that focused on its generative AI tools.

EU warns Microsoft it could be fined billions over missing GenAI risk info

The prospects for troubled banking-as-a-service startup Synapse have gone from bad to worse this week after a United States Trustee filed an emergency motion on Wednesday.  The trustee is asking…

A US Trustee wants troubled fintech Synapse to be liquidated via Chapter 7 bankruptcy, cites ‘gross mismanagement’

U.K.-based Seraphim Space is spinning up its 13th accelerator program, with nine participating companies working on a range of tech from propulsion to in-space manufacturing and space situational awareness. The…

Seraphim’s latest space accelerator welcomes nine companies

OpenAI has reached a deal with Reddit to use the social news site’s data for training AI models. In a blog post on OpenAI’s press relations site, the company said…

OpenAI inks deal to train AI on Reddit data

X users will now be able to discover posts from new Communities that are trending directly from an Explore tab within the section.

X pushes more users to Communities

For Mark Zuckerberg’s 40th birthday, his wife got him a photoshoot. Zuckerberg gives the camera a sly smile as he sits amid a carefully crafted re-creation of his childhood bedroom.…

Mark Zuckerberg’s makeover: Midlife crisis or carefully crafted rebrand?

Strava announced a slew of features, including AI to weed out leaderboard cheats, a new ‘family’ subscription plan, dark mode and more.

Strava taps AI to weed out leaderboard cheats, unveils ‘family’ plan, dark mode and more

We all fall down sometimes. Astronauts are no exception. You need to be in peak physical condition for space travel, but bulky space suits and lower gravity levels can be…

Astronauts fall over. Robotic limbs can help them back up.

Microsoft will launch its custom Cobalt 100 chips to customers as a public preview at its Build conference next week, TechCrunch has learned. In an analyst briefing ahead of Build,…

Microsoft’s custom Cobalt chips will come to Azure next week

What a wild week for transportation news! It was a smorgasbord of news that seemed to touch every sector and theme in transportation.

Tesla keeps cutting jobs and the feds probe Waymo

Sony Music Group has sent letters to more than 700 tech companies and music streaming services to warn them not to use its music to train AI without explicit permission.…

Sony Music warns tech companies over ‘unauthorized’ use of its content to train AI

Winston Chi, Butter’s founder and CEO, told TechCrunch that “most parties, including our investors and us, are making money” from the exit.

GrubMarket buys Butter to give its food distribution tech an AI boost

The investor lawsuit is related to Bolt securing a $30 million personal loan to Ryan Breslow, which was later defaulted on.

Bolt founder Ryan Breslow wants to settle an investor lawsuit by returning $37 million worth of shares

Meta, the parent company of Facebook, launched an enterprise version of the prominent social network in 2015. It always seemed like a stretch for a company built on a consumer…

With the end of Workplace, it’s fair to wonder if Meta was ever serious about the enterprise

X, formerly Twitter, turned TweetDeck into X Pro and pushed it behind a paywall. But there is a new column-based social media tool in town, and it’s from Instagram Threads.…

Meta Threads is testing pinned columns on the web, similar to the old TweetDeck

As part of 2024’s Accessibility Awareness Day, Google is showing off some updates to Android that should be useful to folks with mobility or vision impairments. Project Gameface allows gamers…

Google expands hands-free and eyes-free interfaces on Android