Geopagos, a payments infrastructure startup based in Buenos Aires, has raised $35 million in a round led by Riverwood Capital.
The financing marks the company’s first ever institutional funding. Founded in 2013, the Argentinian startup serves as a white label infrastructure software provider, with the aim of giving businesses the ability to launch financial services.
Today, Geopagos has a presence in 15 Latin American countries and says it facilitates more than 150 million transactions with a processed volume of $5 billion per year.
It promises to help companies that want to create and/or scale a payment acceptance business “an unmatched time to market” and the possibility of, under the white label modality, integrating all functions — from the acceptance of all payment methods to the visualization of all transactions, regardless of the method of payment that has been used to collect.
In a nutshell, Geopagos feels it is in the ideal position of being able to serve as the software enabler that can retrofit incumbents like large banks and launch the enablers like fintechs.
Indeed, customers include large financial institutions, fintechs, retailers and software companies, among others. Some of those customers are Santander, BBVA , Itaú Fiserv, BAC Credomatic, Niubiz and Chile’s Banco Estado.
Put simply, as a fintech infrastructure provider, Geopagos helps its customers acquire and facilitate card payments to their own thousands of clients. It charges a software-as-a-service fee based on usage, which the company says “allows for full alignment.”
“If they win, we win,” said Sebastián Núñez Castro, CEO and co-founder of Geopagos.
In addition to its white label offering, Geopagos also offers its own set of Open APIs so that clients can create and manage their own user experience if they prefer. The company also has several software offerings, including Tap to Phone, which Núñez Castro said “is seeing massive interest regionally.”
There is no question that Latin America is a large, underpenetrated card market — estimated to be at 28% versus 63% in the U.S. This spells ample opportunity for payments infrastructure providers such as Geopagos.
The pandemic accelerated the use of digital payment solutions globally, but especially in Latin America, noted Núñez Castro. Also, in general, the concept of having a market with more than one acquirer opened the possibility for new actors to emerge in the financial ecosystem, generating greater competition and ultimately better, more innovative solutions, he added.
“In this environment, merchants can now significantly increase their ability to accept payments, since system costs are lowered and they have access to new and better products, all of which generates greater financial inclusion,” he told TechCrunch. “In Latin America, all markets are moving toward a more open acquiring model, but each individual country is at varying levels of adoption. We continue to see progress in this area with those that embrace the open acquiring model creating a better, more accessible environment for merchants and purchasers alike.”
The concept of Geopagos was actually born in 2012 on Fifth Avenue in Manhattan, when one of its founders went into the Apple Store and found out that he could pay for the purchase with his card through a small device.
He returned to Argentina and explained the idea to a few of his colleagues, who also were fascinated and became his co-founders. The following year, Geopagos was born with the goal of making payments acceptance easier and more accessible through Latin America, according to Núñez Castro.
Bootstrapped until today, he says Geopagos is a profitable business that has grown revenues at about a 75% CAGR, or compounded annual growth rate, over the last three years.
Prior to helping co-found Geopagos, Núñez Castro spent over 14 years as VP and general manager of Amex´s GNS, LatAm division, where he managed the card business operation in Latin America, including penetration into new markets.
Endeavor Catalyst also participated in the financing. The company plans to use its new funding to continue to build out its technology infrastructure and expand to, and in, other countries in the region, such as Brazil, where it recently launched. It is on a mission to triple the number of merchant transactions it helps facilitate by 2024.
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Geopagos has about 350 employees, mostly in IT/technical roles, according to Núñez Castro, and hired over 100 people in the last year alone.
Francisco Alvarez-Demalde, co-founder and managing partner of Riverwood Capital, noted that his firm has for years been focused on developing relationships with, and investing, in the fintech infrastructure companies that are behind the continued technology adoption trends it sees in fintech globally.
“In particular, Latin America historically has been significantly under-penetrated on payment card adoption. This is an endemic issue that is partially solved by the emergence of the neobanks on the card issuing/banking side of the equation – with record amounts of funding over the last couple of years – but it also requires substantial innovation on the card acceptance side,” he wrote via email.
Geopagos, in Riverwood’s view, powers such innovation — in turn, helping its clients “drive digital inclusion in payments all across the region.”
“As global growth investors and active tech investors in Latin America for the past 14+ years, we engage and evaluate dozens of opportunities in this space,” Alvarez-Demalde added. “This investment theme around ‘Acquiring as a Service’ or ‘Embedded Acquiring’ is a rapidly developing area of disruption, and the Geopagos team, platform, business model, and regional scale were unique relative to smaller competitors.”