The internet has a payment problem it didn’t know it had. Every rail underneath modern commerce, from Visa to ACH to SWIFT, was built on the same assumption: a human is ultimately responsible for authorizing what happens. That assumption is about to break. AI agents now write code, book meetings, scrape data, and provision infrastructure. The next generation will spend money. None of the infrastructure they need to do that exists yet. Two companies are building it right now.

Coinbase shipped x402 in May 2025, a developer-first protocol that embeds payments directly into HTTP. It processed over 100 million transactions in its first six months. Stripe and Tempo countered on March 18, 2026, with the Machine Payments Protocol, an enterprise-first standard launched alongside a $5 billion blockchain and a directory of 100+ integrated services. Each is backed by one of the most important companies in technology. Each approaches the problem from a different angle. The protocol that wins will sit beneath the economic layer of the agentic web. The agentic web is internet activity in which AI agents request resources, transact with services, and pay other agents on behalf of the entities that deployed them.

The market being built for is worth approximately $24 million today, according to Bloomberg's March 2026 reporting on transaction volumes between February and March of this year. An a16z partner has noted that after filtering out wallets trading with themselves, the real on-chain agent volume is closer to $1.6 million. Either figure is a rounding error against global payments volumes measured in hundreds of trillions. The infrastructure being standardized right now assumes that gap will close fast.

The signal worth pausing on is who Stripe chose as design partners on MPP. Visa and Shopify are unsurprising. OpenAI and Anthropic are the actual story. A payments company that processed $1.9 trillion in 2025 brought two AI labs into the design room for its next-generation standard. The customer being designed for is no longer human.

This piece walks through why these protocols exist, how they differ, and where the most durable investment opportunities sit.

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Why the Internet Was Never Built for Agents

Every payment rail in use today assumes a human is ultimately responsible for authorizing what happens. Credit cards require a cardholder. Bank transfers require an account holder. OAuth tokens require someone to log in. API keys are issued to developers, not to software. Every rail was designed around a human authorization chain.

AI agents break all of those assumptions.

There are three reasons the existing infrastructure cannot accommodate them. The first is pricing. Credit card fees of roughly $0.30 per transaction make micropayments mathematically impossible. An API request cannot be priced at $0.001 when the rail charges three hundred times that amount per transaction. Subscription models are a workaround that averages demand across time, but they break the pay-per-use logic that agent workflows require. An agent that consumes three API calls should not pay for thirty days of access.

The second is identity. Traditional banking rails require a verifiable human account holder under KYC. Coinbase CEO Brian Armstrong noted publicly in early 2026 that AI agents cannot meet Know Your Customer requirements and therefore cannot use traditional banking infrastructure. This is a structural mismatch, not a regulatory edge case.

The third is settlement, and it is the largest of the three. Cross-border payments settle in one to three days through correspondent banking, at unpredictable cost. For an agent executing thousands of micropayments per hour across jurisdictions, that is a hard stop. Stablecoins offer an answer. Global stablecoin volumes doubled to $400 billion in 2025, with 60% of that volume now attributable to B2B activity. The shift from speculative to commercial use is the foundation on which the entire agentic payments stack is being built.

The $190 trillion annual cross-border payments market is the clearest illustration of the gap, and the prize.

The Two Protocols That Matter

The rails to capture that prize are being built right now. Coinbase shipped first. Stripe shipped second. Google released a coordination protocol called AP2 in September 2025 that handles agent-to-agent messaging and routes payments through x402 underneath, which makes it more an extension than a third competitor. The serious race is between two protocols.

x402: Payments Embedded in HTTP

Coinbase launched x402 in May 2025 alongside the x402 Foundation, co-established with Cloudflare. The protocol revives the long-dormant HTTP 402 “Payment Required” status code to embed payments directly into web interactions.

A client sends a standard HTTP request. The server responds with a 402 status code and payment instructions: amount, accepted currency, destination wallet. The client attaches a signed payment payload, retries the request, and the facilitator settles the transaction on-chain. Access is granted. No new communication layer is introduced. It extends native HTTP behavior.

Transaction fees sit below $0.0001. That makes micropayments practical for the first time. An agent can pay $0.001 for an API request or fractions of a cent per data query. In its first six months, x402 processed over 100 million payments. V2, released in December 2025, added multi-chain support by default and compatibility with legacy rails including ACH and card networks. Key integrations include Circle, Alchemy, Visa TAP, and Stripe’s own agentic commerce work. Cloudflare’s “pay per crawl” beta lets developers fetch web data and settle payments in the same request cycle. MCP servers can now expose paid tools that Claude, Gemini, and other LLMs can access natively.

MPP: The Enterprise Standard

If x402 is the open-internet answer, MPP is the enterprise one. Stripe and Tempo launched the Machine Payments Protocol on March 18, 2026. Tempo is a Layer 1 blockchain incubated by Stripe and Paradigm, built specifically for high-volume payment workloads. It has no native gas token. Fees settle in major stablecoins. It is ISO 20022 compliant, which is the international financial messaging standard used by global banks. Tempo raised $500 million at a $5 billion valuation, with Thrive Capital leading.

The core innovation of MPP is the “session” primitive. Think of it as OAuth for payments. An agent authorizes once and pre-funds its account. Every subsequent API call or resource consumption triggers real-time automatic settlement without a separate on-chain transaction. Thousands of small transactions aggregate into a single settlement event. That solves the reconciliation problem that makes micropayments operationally complex for enterprises.

MPP runs on Tempo but is rail-agnostic. Visa extended it to card payments. Stripe added support for wallets and other payment methods through its existing platform. Lightspark integrated Bitcoin payments over Lightning. The launch directory lists over 100 compatible services. Klarna announced a stablecoin launch on Tempo.

Stripe processed $1.9 trillion in total payment volume in 2025, a 34% year-on-year increase. MPP is Stripe’s deliberate infrastructure bet on where commerce is heading.

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Developer-First vs Enterprise-First: A Familiar Pattern

Both bets are serious. They are also different bets, aimed at different segments of the market. The x402 vs MPP contest is not unprecedented. The history of payment infrastructure is full of developer-first protocols competing against enterprise-first standards, and the typical outcome is not a single winner. It is segmentation.

Stripe is the clearest case. When it launched in 2010, the existing rails were ACH and the card networks, both designed for enterprise integration. Stripe won developers by collapsing weeks of integration work into seven lines of code. ACH and Visa never went away. They handle different jobs today than Stripe does, and they coexist. The market segmented along the line between developer-first and enterprise-first.

The same pattern played out in cloud infrastructure. AWS won developers while incumbent enterprise IT retained legacy workloads. Twilio did the same to legacy SMS aggregators. Wise did the same to SWIFT in international payments. In each case, the developer-first option captured the long tail of new use cases while the enterprise-first incumbent retained the high-volume, regulated core.

x402 fits the developer-first pattern cleanly. It is permissionless and lightweight, optimized for the long tail of micropayment use cases that traditional rails cannot price. MPP fits the enterprise-first pattern equally cleanly. It is ISO 20022 compliant, distributed through Stripe’s existing platform, and extended by Visa to card networks. The design target is organizations that need integration with existing reconciliation infrastructure.

The reasonable base case is that both protocols persist. x402 captures the pay-per-call long tail and the agent-native services that have no enterprise analog. MPP captures the high-volume, audit-required workloads that enterprise procurement and treasury functions need. The interesting investment question is not which one wins. It is which categories each owns, and where the abstraction layer that bridges them lives.

The Stack: Rails, Wallets, Compliance

Underneath the protocol layer, the agentic payments stack divides into rails, wallets, and compliance. Each is contested. None are solved.

The rails layer is where settlement happens. Tempo, x402 on Base and Solana, Lightspark on Bitcoin Lightning, and Stripe Bridge for stablecoin-to-fiat are the primary players. Each represents a different architectural bet: a dedicated L1 optimized for payments, protocol extension on existing L1s, Bitcoin-native, or fiat-bridged stablecoin infrastructure.

The wallet and identity layer is where agents get their credentials, and it is where the most production work is happening this year. Coinbase launched Agentic Wallets in February 2026, the first wallet infrastructure purpose-built for AI agents. These wallets provide programmable spending policies, non-custodial identity, and permissioned execution. Spending limits are enforced before any transaction executes. KYT screening blocks high-risk interactions automatically. At the standards level, ERC-8004 is the emerging Ethereum standard for on-chain agent identity, co-authored by MetaMask, Google, the Ethereum Foundation, and Coinbase. The standard went live on Ethereum mainnet on January 29, 2026. BNB Chain followed in February with its own deployment alongside BAP-578, which introduced Non-Fungible Agents: software entities that exist as on-chain assets, own wallets, and can hold and spend funds. On the card side, Visa’s Intelligent Commerce initiative is working with over 100 partners globally. Mastercard’s Agent Pay uses Agentic Tokens, dynamic digital credentials that bring tokenization from mobile payments into agentic commerce.

The compliance and trust layer is the least developed part of the stack, and the most consequential. Payment regulations like PSD2 and Strong Customer Authentication require clear human authorization for payment orders. No current regulatory mechanism treats an AI agent as equivalent to a human payer. This gap is not a technical problem. It is a regulatory one, and closing it will define the ceiling for how much volume agentic commerce can reach in the near term.

The concept of KYA, for Know Your Agent, is emerging as the compliance framework for this space. Every agent will eventually need a verifiable digital identity anchored to a legal entity, a smart wallet with programmable constraints, and a reputation record built on past behavior. The useful analogy is a corporate employee with a prepaid card. Rules exist. Limits are set. Activity is monitored. Accountability flows back to the entity that deployed the agent.

Four Investment Themes

That is the stack being built. The question for builders and investors is which layers get monetized first, and by whom. Four durable themes emerge from the protocol landscape, each at a different stage of development.

Protocol infrastructure follows winner-take-most dynamics. Payment protocol adoption historically follows winner-take-most dynamics, but not winner-take-all. Visa and Mastercard coexist. TCP/IP runs on different physical infrastructure. The more relevant question is whether agentic payments fragment by use case or whether one standard achieves enough early adoption to become the default across uses. x402’s 100 million transactions in six months reflect developer-first adoption, the same pattern that built Stripe and Twilio into category leaders. MPP’s launch with Stripe, Visa, and a 100+ service directory reflects enterprise-first adoption, the same pattern that built SWIFT and ACH into durable infrastructure. Both approaches have historical precedent. The investment thesis for protocol-adjacent infrastructure does not depend on picking the winning protocol. Facilitators, settlement verification, multi-protocol abstraction layers, and developer tooling that normalizes across MPP and x402 will be durable plays as long as multiple standards remain in play.

The most interesting early-stage opportunity sits at the identity layer. The problem is well-defined and unsolved. Agents need verifiable credentials. Credentials need to anchor to accountable legal entities. Spending behavior needs to be auditable. The whole system needs to work without requiring human approval at each transaction. None of the solutions that exist today are production-ready at scale. ERC-8004 is an emerging standard, not a deployed product. Coinbase Agentic Wallets provide infrastructure but not the compliance layer that regulated industries require. The Banking-as-a-Service parallel is instructive. When community banks started partnering with fintech companies at scale in the late 2010s, the compliance gap between what banks were required to enforce and what technology companies could manage produced years of consent orders, regulatory friction, and market restructuring. Agentic payments is likely to follow the same arc, with early enthusiasm giving way to compliance reckoning before the category restructures. Companies that build KYA tooling before the reckoning arrives will be well-positioned.

B2A is becoming a real revenue category. Agents have fundamentally different consumption patterns than humans. They pay per task, per API call, per data query. SaaS sells subscriptions to humans. B2A sells capabilities to agents. Browserbase, which lets agents spin up headless browsers and pay per session via MPP, is one early example. PostalForm, which lets agents pay to print and send physical mail, is another. These are agent-native services with no direct human analog. The investment question is which existing software categories get repriced for agent consumption first. Data APIs are the most obvious target. Pay-per-query has always made more sense than subscription access for high-volume machine consumers, and the economics only improve at agent scale. Developer infrastructure is next. Compute is the obvious one. Storage and inference will follow.

Developer tooling for agent payments is wide open. Despite rapid progress on protocol and wallet infrastructure, the developer experience for building agent-native payments remains difficult. Integrating MPP requires familiarity with both stablecoin infrastructure and Stripe’s existing APIs. x402 is simpler at the HTTP layer but requires understanding on-chain settlement and facilitator mechanics. The companies that abstract this complexity effectively, presenting a clean interface for developers who want to add payment capability to an agent without becoming payments engineers, will capture significant value. This is the same arc that built Stripe itself from 2010 onward.

Risks

The opportunity is real. The path to capturing it is not clear. Four structural risks will shape how quickly this market develops.

Protocol fragmentation is the most immediate. Two competing open standards launched within ten months of each other, with Google’s coordination layer adding a third surface area. If MPP and x402 remain incompatible silos with high switching costs between them, developers will consolidate on one and the other will atrophy, or both will persist in separate verticals with the overhead that multi-protocol environments always impose. The middleware providers that abstracted away the complexity of multi-bank relationships in BaaS ultimately could not sustain the model. Multi-protocol abstraction in agentic payments could face a similar challenge.

What happens when an AI agent makes a payment that violates strong customer authentication? No one knows yet. PSD2, AML, and strong customer authentication frameworks all assume a human authorization chain. Until regulators provide clear guidance on how agentic payment flows should be governed, enterprises in regulated industries will face legal uncertainty that slows adoption. The CFPB’s 2025 pullback from BNPL oversight, after years of preparing to regulate the category, showed how regulatory posture can shift quickly in fintech. Agentic payments could face the same volatility.

LLM provider concentration creates a systemic risk that is often underappreciated. Agents operate inside inference environments controlled by a small number of providers. If those providers become chokepoints in the agent economy, they effectively control which agents can transact with which services. The identity frameworks being built today need to be model-agnostic and portable to avoid this concentration risk materializing.

A compromised agent with a funded wallet and broad spending authorization is a category of event with no precedent. A compromised human account is a localized incident. The spending-limit and KYT infrastructure being built into Coinbase Agentic Wallets and Nekuda’s mandate model are early responses, but they will not be sufficient once agent volumes reach the scale that makes these systems a meaningful attack target.

The Takeaway

None of these risks change the direction of travel. They change the timeline.

The infrastructure being built this year is the foundation for a payments ecosystem where software is the primary economic actor. MPP and x402 are not competing fintech products. They are competing proposals for how the internet should work when machines are the ones spending money.

The market is small today. Roughly $24 million in on-chain agent volume against a global payments backdrop measured in hundreds of trillions. Infrastructure adoption is nonlinear. The early internet processed negligible e-commerce volume before reaching the trillions that flow through it today.

The protocols being standardized this year will determine which companies sit underneath the agent economy when it scales. The companies that own those rails will own the economic layer of the agentic web.

Sources

Stripe and the Machine Payments Protocol (MPP)

- Stripe, ”Introducing the Machine Payments Protocol”, March 18, 2026

- Fortune, ”Stripe-backed crypto startup Tempo releases AI payments protocol, launches blockchain”, March 18, 2026

- The Defiant, ”Tempo Goes Live on Mainnet, Unveils Machine Payments Protocol with Stripe”, March 18, 2026

- CoinDesk, ”Stripe-led payments blockchain Tempo goes live with AI agent protocol”, March 18, 2026

- Ledger Insights, ”Stripe, Paradigm launch Tempo blockchain alongside machine payments standard”, March 20, 2026

Coinbase and the x402 Protocol

- Coinbase Developer Platform, ”Introducing x402: a new standard for internet-native payments”, May 2025

- x402 Foundation, ”Introducing x402 V2: Evolving the Standard for Internet-native Payments”, December 2025

- The Block, ”Coinbase-incubated x402 payments protocol built for AIs rolls out V2”, December 11, 2025

- Cloudflare, ”Launching the x402 Foundation with Coinbase, and support for x402 transactions”, December 3, 2025

Coinbase Agentic Wallets

- Coinbase Developer Platform, ”Introducing Agentic Wallets: Give Your Agents the Power of Autonomy”, February 11, 2026

- The Block, ”Coinbase rolls out AI tool to ‘give any agent a wallet”, February 13, 2026

- PYMNTS, ”Coinbase Debuts Crypto Wallet Infrastructure for AI Agents”, February 11, 2026

ERC-8004 Identity Standard

- Ethereum Improvement Proposals, ”ERC-8004: Trustless Agents”, August 2025

- Allium, ”Onchain AI identity: what ERC-8004 unlocks for agent infrastructure”, February 2026

- QuickNode, ”ERC-8004: A Developer’s Guide to Trustless AI Agent Identity”, March 4, 2026

Market Sizing and Agent Volumes

- Bloomberg, ”Stablecoin Firms Bet Big on AI Agent Payments That Barely Exist”, March 7, 2026

- Bloomberg, ”The Race to Bank AI Agents in New Era of Commerce Is Heating Up”, March 17, 2026

- Bloomberg, ”Coinbase, Cloudflare, Stripe Push to Shape Future of AI Money”, April 2, 2026

In January 2025, Apollo launched a tokenized diversified credit fund on six blockchains. By November, it had $170 million in assets under management. Hamilton Lane tokenized a feeder fund for its Secondary Fund VI on Polygon, dropping the minimum investment from $5 million to $20,000. KKR put a health care growth fund on Avalanche. BlackRock’s BUIDL, the tokenized U.S. Treasury product that became the proof of concept for institutional tokenization, peaked at $2.9 billion in AUM and is now accepted as trading collateral on Binance.

The largest alternative asset managers in the world have moved. They did it through Securitize, which now manages $4 billion in tokenized assets and is going public at a $1.25 billion valuation via a Cantor Fitzgerald SPAC, with BlackRock, ARK Invest, Hamilton Lane, and Morgan Stanley rolling their stakes at 100%.

Now look at Latin America. The region deploys $15.5 billion a year in private equity across more than a thousand deals. Patria Investments manages over $48 billion in alternatives. Vinci Partners runs one of the largest infrastructure platforms in the region. XP Inc. sits on R$1.9 trillion in client assets. BTG Pactual is the biggest investment bank in Latin America.

Not one of them has a tokenized product.

The only institutional tokenized asset ever issued by a major LatAm financial institution is BTG Pactual’s ReitBZ, a $15 million real estate security token on Tezos. It launched in 2019. It paid its first dividends in 2020. And then nothing. No follow-on product from BTG. No response from any competitor.

That silence is about to break.

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The demand catalyst no one is talking about

The supply side of LatAm tokenization gets most of the attention. Infrastructure platforms, regulatory sandboxes, blockchain partnerships. But the most consequential development is on the demand side, and it happened in Mexico.

Mexico’s AFOREs (pension funds) grew to $409 billion in AUM as of June 2025. Recent regulatory reforms now permit up to 30% allocation to private equity, credit, and alternative investments. That is roughly $123 billion in potential alternative allocation from a single institutional channel.

This is where tokenization becomes a distribution story, not a technology story. Traditional PE fund structures require high minimums, long lock-ups, and complex subscription processes that make it difficult for pension funds to diversify across many managers. Tokenized fund interests solve this mechanically. Lower minimums. Programmable distributions. Secondary market liquidity. If a single Mexican AFORE allocated 5% of its alternatives budget to tokenized products, that is $6 billion. More than every LatAm tokenization platform has processed combined.

The structural pressure is already visible. In H1 2025, secondaries reached a record 28% of LatAm PE exits, totaling $6.2 billion in realizations. When nearly a third of PE exits are happening through secondary sales, the market is telling you it has a liquidity problem. Tokenization is the liquidity answer.

High-net-worth individuals plan to allocate 8.6% of their portfolios to tokenized assets by 2026. The institutional comfort with digital assets is not hypothetical. It is measured.

The legal architecture is being mapped in parallel. Perez-Llorca published an analysis of how tokenized LP interests and private securities could work across Colombia, Mexico, Spain, and Brazil. Law firms do not publish cross-border tokenization frameworks for academic exercise. They publish them because clients are asking.

The infrastructure is ahead of the institutions

The conventional explanation for LatAm’s tokenization gap is that the region lacks infrastructure. That was true in 2021. It is no longer true.

Liqi Digital Assets, founded in 2021 and backed by Kinea Ventures (Itau Unibanco’s VC arm) and Oliveira Trust, has surpassed $100 million in tokenized real-world assets on the XDC Network. Its pipeline targets $500 million across private credit, receivables, corporate debt, agribusiness instruments, and real estate. These are the same structured credit instruments that Brazilian institutional investors already understand. CRIs, CRAs, receivables, corporate debt. Now with programmable distribution and fractional access.

Mercado Bitcoin, which partnered with Polygon Labs to build its tokenization infrastructure, has issued 340+ tokenized products totaling roughly $180 million. It previously tokenized over R$1 billion in private credit on the XRP Ledger. By volume, it ranks as the third-largest private credit tokenization platform in the world, behind only firms operating in the U.S. and Europe.

BLOCKBR is building white-label tokenization platforms that handle the full stack from legal analysis to settlement. This is production infrastructure, not pilot programs.

On the regulatory side, the momentum is real. Brazil’s CVM opened a public consultation from September to December 2025 to reform Resolution 88, its equity crowdfunding regime, specifically to accommodate securitization and asset tokenization. If this reform produces a viable framework for tokenized fund share distribution, it removes the single largest regulatory barrier to institutional adoption. The CVM sandbox has already authorized tokenized CRI (Real Estate Receivables Certificates) issuance, and CRI volume grew 21.6% with transactions up 35.3% under this regime.

Argentina’s CNV is doing something unexpected. Resolution 1081, published in August 2025, expanded the country’s tokenization sandbox to include securities: shares, corporate bonds, and CEDEARs (Argentine depositary receipts for foreign securities). Only fully registered VASPs can act as depositaries, which means this is supervised tokenization, not a crypto free-for-all. The sandbox runs through August 2026. It is the most progressive securities tokenization framework in Latin America.

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The platform battle: Securitize vs. Liqi vs. Everyone Else

Every major global PE tokenization runs through Securitize. Apollo, Hamilton Lane, KKR, BlackRock. It is a $1.25 billion company with zero presence in a region that deploys $15.5 billion a year in PE. That gap will not last.

The question is how it closes. Three scenarios are plausible.

Securitize partners with a major LatAm bank. This is the most likely path. Securitize already has relationships with the global LPs that invest in LatAm funds. BTG Pactual has the institutional credibility and a dormant tokenization capability from ReitBZ. XP has 3 million active clients and the distribution infrastructure to place tokenized products at scale. A Securitize partnership with either would immediately create the most credible tokenization platform in the region. The risk is speed. Securitize has shown no urgency in LatAm, and large bank partnerships take 12 to 18 months to operationalize.

Liqi scales fast enough to become the regional standard. Liqi has the Itau backing through Kinea Ventures, a $500 million pipeline, and deep knowledge of Brazilian structured credit instruments. Its advantage is specificity. It understands CRIs, CRAs, and the receivables structures that institutional Brazilian investors already use. If Liqi can convert its pipeline into AUM before Securitize arrives, it becomes the default infrastructure layer for LatAm PE tokenization. The challenge is that Liqi’s current AUM ($100 million) is a fraction of what Securitize processes globally ($4 billion). Institutional credibility takes time to build.

A global custodian builds the middleware layer. This is the dark horse. Fireblocks already provides custody and settlement infrastructure for tokenized assets globally. If a custodian or middleware provider builds a LatAm-specific tokenization layer that any asset manager can plug into, the platform question becomes less relevant. The asset manager picks the custodian, not the tokenization platform. This scenario favors fragmentation over consolidation, but it also lowers the barrier for the first major LatAm GP to move.

The collision between global platforms and local infrastructure will define who captures the tokenization fee layer in LatAm for the next decade.

Who moves first

Every financial market follows the same sequence. The instruments are created. The infrastructure is built. Regulation provides the framework. Then the institutions move. In LatAm tokenization, the first three stages are underway simultaneously. Liqi and Mercado Bitcoin have built the rails. Brazil’s CVM and Argentina’s CNV are writing the rules. The global PE firms have proven the model.

The missing piece is the institutional commitment. The firms that control the capital have not yet moved onto the infrastructure that has been built for them. Three candidates stand out.

BTG Pactual is the only major LatAm institution that has actually issued a tokenized security. ReitBZ was small ($15 million) and had no follow-on, but it means BTG has institutional memory. Its team has been through the legal structuring, the custody decisions, and the compliance process. Restarting is easier than starting from scratch. BTG also operates the largest investment bank in Latin America, which gives it placement capability across institutional and HNW channels. The risk is that BTG’s 2019 experiment may have been filed as a one-off innovation project rather than a strategic priority.

XP Inc. has the distribution advantage. R$1.9 trillion in client assets and 3 million active clients make it the largest independent investment platform in Brazil. If XP launched a tokenized fund product, it could place it across its existing client base without building new distribution infrastructure. XP’s challenge is that it has no tokenization history. It would need to partner with Liqi, Securitize, or build its own platform. But distribution wins markets, and no one in LatAm has more of it.

Patria Investments has the AUM ($48 billion) and the GP credibility. It is the closest LatAm equivalent to the global firms that have already tokenized. A Patria tokenized fund would carry the institutional weight that the market is waiting for. But Patria has shown no public interest in tokenization, and its investor base (large institutional LPs) may see less immediate value in fractional access than retail-facing platforms.

Less than 5% of Latin Americans invest in capital markets. LatAm PE suffers from a liquidity discount that depresses valuations and limits participation. Tokenization removes that structural barrier by making institutional-grade products fractional, programmable, and accessible on a smartphone.

The first major LatAm PE firm to tokenize fund interests will not just launch a product. It will reprice the liquidity premium for an entire region.

Sources:

LAVCA Industry Data 2025

LAVCA Q3 2025

Securitize/KKR

Hamilton Lane/Securitize

Apollo ACRED Launch

Apollo ACRED $100M

BTG Pactual ReitBZ

BlackRock BUIDL $1B

CNBC Securitize SPAC

Liqi/XDC $500M Pipeline

Mercado Bitcoin/Polygon

CVM Resolution 88 Reform

CNV Resolution 1081

Mexico Pension Funds

Fireblocks Tokenization Report

Perez-Llorca Legal Analysis

CoinLaw Statistics

Custom Market Insights RE Tokenization

Between 2021 and 2024, while the crypto industry cycled through boom, bust, and regulatory battles, a quiet infrastructure revolution took place across Latin America. Bitso partnered with Circle for Mexico-US corridors. Tether launched MXNT, the first Mexican peso stablecoin. Conduit and Mural Pay built cross-border APIs. Ripio expanded enterprise services across seven countries. Then Stripe acquired Bridge for $1.1 billion in October 2024, signaling that stablecoin infrastructure had become strategic. By 2024, enterprise stablecoin adoption in the region had grown 100% year-over-year.

Now look at every layer of the B2B stack. The stablecoin issuers crowd the top: Circle has 1,100+ global partners and launched its Payments Network. Tether invested in Parfin in November 2025 to push USDT into institutional treasury operations. Below them, infrastructure providers compete on the same APIs: Stripe/Bridge, Conduit (which raised $36 million in May 2025 after 16x volume growth), Mural Pay, VelaFi, and Inswitch (acquired by TransNetwork in 2024) all offer cross-border payment flows. The exchanges battle for enterprise on-ramps: Bitso Business, Ripio, and Mercado Bitcoin (now partnered with Ripple). At the last mile, payout rails like dLocal, Félix Pago, Alfred, and RedotPay convert stablecoins to local currency.

Every layer is crowded. 15+ companies are competing for the same enterprise clients. Stablecoins now dominate LATAM crypto flows: 90% in Brazil alone. Enterprise volumes on platforms like Bitso doubled in six months. The B2B stablecoin market in Latin America is a red ocean. The infrastructure buildout is complete. The land grab is ending. Margins will compress.

Meanwhile, the consumer market is wide open.

Mercado Libre controls the wallet, the marketplace, and the payment processor. No other company in Latin America has all three. Nubank is embedding stablecoins into credit cards for 100 million customers. Rain powers stablecoin spending cards for dozens of crypto neobanks across the region.

The consumer war has begun.

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The Red Ocean: How B2B Got Crowded

The stablecoin story in Latin America started with businesses, not consumers. Economics drove the adoption.

A São Paulo manufacturer paying a Shenzhen supplier through traditional rails faces 3-5% SWIFT fees and three-day settlement. The same payment through stablecoin rails settles in minutes at a fraction of the cost. Brazilian companies figured this out early. By 2025, Central Bank officials reported that 90% of the country’s crypto flows were stablecoin-related. The primary use case was payments.

The numbers tell the story. CEMLA’s 2023 survey found that stablecoin adoption across participating Latin American jurisdictions was “generally considered to be low.” One year later, Bitso Business had 1,900 enterprise clients across payments, remittances, neobanks, and gaming. Stablecoin volumes on the platform doubled between H2 2024 and H1 2025. FX, treasury, and arbitrage operations surged to 45% of total volumes, overtaking remittances as the primary use case.

The infrastructure buildout followed a predictable pattern. First came the rails. Bitso partnered with Circle in late 2021 to enable crypto payments between Mexico and the US. Tribal Credit raised $40 million in a hybrid debt round funded partly by stablecoins in January 2022, pushing new use cases through its Bitso and Stellar partnerships. By 2025, Bitso had launched MXNB, an enterprise-grade peso stablecoin aligned with B2B transparency and performance requirements.

The enterprise market matured faster than anyone expected. Fireblocks reported that 100% of surveyed Latin American firms are either live, piloting, or planning stablecoin payment strategies. 62% use stablecoins to pay suppliers. 71% cite cross-border payments as their primary use case. The infrastructure buildout took three years. The adoption curve took eighteen months.

The result is saturation. Bitso, Circle, Stripe/Bridge, Conduit, Mural Pay, Ripio, Tether/Parfin, and a dozen others are all fighting for the same enterprise clients. The B2B cross-border payments market in Latin America is projected to reach $57 billion by 2030, but the players are already in position. New entrants face established relationships, integrated systems, and compressed margins.

The blue ocean opportunity lies elsewhere.

The Blue Ocean: Consumer Stablecoins

For three years, consumer stablecoin usage in Latin America meant one thing: savings. Argentines fleeing 100%+ inflation converted pesos to USDT. Venezuelans earning in bolivars stored value in USDC. Stablecoins represented 72% of all crypto purchases on Bitso in Argentina in 2024. Bitcoin was just 8%.

But holding is a feature. Spending is a business model.

The Argentine fintechs understood this first. Lemon Cash launched its Visa-branded crypto card in December 2021, offering 2% cashback in Bitcoin. Buenbit partnered with Mastercard the same year. Belo followed with cashback ranging from 2% to 21%. By 2024, Lemon Cash had grown to 5 million peak monthly active users with $5.9 billion in transaction volume. 78% of deposits were stablecoins. Users spent them daily.

The B2B infrastructure became consumer infrastructure. Wallets added cards. Cards added yields. The Argentine crypto wallets proved the model worked at scale. Now the giants are entering.

Mercado Pago’s Meli Dólar launch in August 2024 signaled the shift. The product is simple. Brazilian users buy a dollar-backed stablecoin through the Mercado Pago app. No fees. No crypto knowledge required. The issuer is Meli Uruguay SRL. The liquidity comes from Ripio, an exchange where Mercado Libre’s founder invested personally in 2021. 52 million active users in the region now have access to dollar-denominated stablecoins through an app they already use.

Nubank’s approach is more ambitious. Rather than launching a separate stablecoin product, Campos Neto announced testing stablecoin payments directly through credit cards. The partnership with Circle positions USDC as the primary stablecoin. Nubank isn’t asking users to learn crypto. They’re embedding stablecoins into a product 100 million people already use.

Behind both giants, infrastructure providers are racing to become the default rails. Rain, a Visa Principal Member, now powers stablecoin cards for KAST, RedotPay, ether.fi Cash, and dozens of other crypto neobanks. Their model is B2B2C: they don’t compete for users, they enable the companies that do.

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Why Now

The timing is not accidental. Three catalysts converged in 2024-2025 to unlock consumer stablecoin adoption.

The first catalyst is regulation. The US GENIUS Act, signed on July 18, 2025, created the first federal framework for payment stablecoins. It mandates 1:1 liquid reserves and monthly attestations. The EU’s MiCA stablecoin rules took effect on June 30, 2024. Brazil’s Central Bank published Resolutions 519, 520, and 521 in November 2025, bringing crypto companies under banking-style oversight. The rules take effect February 2, 2026, with capital requirements between $2 million and $7 million depending on services offered.

Brazil’s framework explicitly addresses consumer protection. Service providers must segregate client assets, disclose risks and fees, and implement conflict of interest safeguards. Stablecoin purchases and international transfers will be categorized as foreign exchange operations. Governor Gabriel Galipolo noted that 90% of Brazil’s crypto transaction volume is tied to stablecoins, many used to bypass traditional financial systems. The regulation legitimizes what’s already happening while creating barriers for undercapitalized players.

The second catalyst is infrastructure maturity. Visa expanded its stablecoin settlement program in July 2025 to support USDC, PYUSD, USDG, and EURC across Ethereum, Solana, Stellar, and Avalanche. The program reached $3.5 billion in annualized settlement volume by November 2025. Mastercard announced partnerships with Circle, Paxos, Fiserv, and PayPal in June 2025. The card networks that process global consumer transactions now support stablecoin settlement natively.

The third catalyst is strategic consolidation. Stripe’s $1.1 billion acquisition of Bridge in October 2024 was described as a “landmark deal for the stablecoin industry.” Since then, M&A bridging fiat and crypto has accelerated. In June 2025, Stripe acquired Privy, an embedded wallet provider supporting 75 million accounts. In October 2025, Modern Treasury acquired Beam for $40 million to add stablecoin rails to its payment infrastructure. The companies that enable stablecoin payments are being absorbed by the platforms that reach consumers.

MoneyGram’s CEO captured the transition: stablecoins are transforming their business “from the B2B back office to the B2C of how we deliver the service to our consumers.”

The Stakes

The consumer stablecoin market in Latin America is not a niche. In Argentina, over 30% of digital wallets now hold stablecoins for daily spending. According to the IMF, stablecoin flows in Latin America and the Caribbean reached 7.7% of GDP in 2024, the highest ratio globally. Africa followed at 6.7%. Fireblocks reports that 75% of surveyed firms see growing customer interest in stablecoin products. 40% of Latin American respondents cite customer demand as their primary adoption driver, more than any other region.

The competitive dynamics differ from B2B. Bitso built its moat through 1,900 enterprise clients and $80 billion in volume. Relationships and integration depth matter when you’re selling to treasury departments. In consumer markets, the moat is distribution. Whoever already has the users wins.

Each combatant has a different theory of victory.

Nubank is betting that distribution beats specialization. With 100 million customers, they don’t need the best crypto product. They need a good enough crypto product inside an app people already use. Their playbook is methodical. They entered crypto in 2022 with Bitcoin and Ethereum. By 2025, they offered 20+ cryptocurrencies including Cardano, Cosmos, Near Protocol, and Algorand. They added send and receive functionality for Bitcoin, Ethereum, and Solana. They started offering 4% annual yield on USDC holdings, one of the first major banks in the region to integrate stablecoin yields into everyday banking. Now one in four new Nubank Cripto investors chooses USDC. Roberto Campos Neto, the former Central Bank governor they hired as vice-chairman, is leading the stablecoin credit card pilot. In September 2025, they hired Michael Rihani from Coinbase as Director of Crypto. At Coinbase, Rihani led transfers, payments, and card products and helped launch $1 billion in Bitcoin-backed loans. Before that, he worked on Bitcoin payments at Tesla and built Apple Pay, Apple Card, and Apple Cash at Apple. Nubank is making crypto invisible inside a bank that 100 million people already trust. Their crypto division already serves 6.5 million customers.

Mercado Pago is betting that integration beats specialization. They control the wallet, the marketplace, and the payment processor. No other company in Latin America has all three. Their buildout has been deliberate. In May 2021, Mercado Libre became the first major Latin American public company to add Bitcoin to its treasury, now holding 570 BTC. Seven months later, they launched crypto trading in Brazil through Paxos, offering Bitcoin, Ethereum, and the USDP stablecoin to 56 million monthly active users. They invested in Mercado Bitcoin and Paxos in January 2022. They launched Mercado Coin, an Ethereum-based loyalty token developed with Ripio, in August 2022. They added USDP in Mexico in June 2023, USDC in Chile two months later. Then came Meli Dólar in August 2024, their own dollar-backed stablecoin issued by a Uruguayan subsidiary with Ripio as market maker. They expanded it to Mexico in 2025. The acquisition of Nikos DTVM signals expansion into asset management. Each piece extends the ecosystem. The strategic play is connecting stablecoins to checkout. Mercado Libre processed $51.5 billion in gross merchandise volume in 2024. If Brazilian consumers can pay merchants in a reais-pegged stablecoin and merchants settle in stablecoins, Mercado Pago captures both sides of the transaction. They haven’t announced this yet. But they’ve built every piece required to do it.

Rain is playing a different game entirely. They don’t compete for users. They power the companies that do. Rain is a Visa Principal Member that lets fintechs launch stablecoin-powered cards in weeks. Their infrastructure settles 100% of card payment volume directly in stablecoins on the Visa network. In January 2025, Rain raised a $250 million Series C led by ICONIQ Capital, valuing the company at $1.95 billion, just ten months after their Series A and four months after their Series B. The funding trajectory reflects explosive growth: active card base increased 30x in the past year, while annualized payment volume grew 38x. Rain now facilitates over $3 billion in annualized transactions across 200+ partners including Western Union, Nuvei, KAST, RedotPay, and ether.fi Cash, with reach extending to 2.5 billion potential users across 150+ countries. They hold 80%+ market share of crypto card volumes globally. Rain’s thesis is that most fintechs won’t build card infrastructure from scratch. They’ll rent it. Every crypto wallet that adds a spending card, every neobank that offers stablecoin accounts, every payroll platform that pays in USDC becomes a Rain customer. The B2B2C model means Rain wins regardless of which consumer app dominates.

The B2B war took three years. The consumer war will be faster. Infrastructure exists, regulation is arriving, and distribution giants are entering. The next eighteen months will determine who captures Latin America’s consumer stablecoin market.

The pipes are built. The war is for the users.

Sources:

• Bitso: Stablecoin Landscape in Latin America H1 2025:https://business.bitso.com/ebook/stablecoin-landscape-in-latin-america-first-half-2025

• Fireblocks: Latin America Leads in Stablecoin Adoption: https://www.fireblocks.com/blog/execution-in-motion-how-latin-america-is-leading-stablecoin-adoption

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• Chainalysis: 2025 LATAM Crypto Adoption: https://www.chainalysis.com/blog/latin-america-crypto-adoption-2025/

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• Cointelegraph: Nubank Stablecoin Credit Card Integration:https://cointelegraph.com/news/nubank-plans-stablecoin-integration-credit-card-transactions

• PRNewswire: Rain $58M Series B: https://www.prnewswire.com/news-releases/rain-raises-58m-series-b-led-by-sapphire-ventures-to-become-the-enterprise-stablecoin-platform-of-record-302540587.html

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• Stablecoin Dash: Rain and Visa Dollar Cards: https://stabledash.com/news/2025-11-5-Behind-Dollar-Cards-How-Rain-and-Visa-Are-Rebuilding-Global-Payment-Settlement)

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• Chainalysis: Brazil Crypto Regulatory Framework: https://www.chainalysis.com/blog/brazil-crypto-asset-regulatory-framework-2025/

• CNBC: Stablecoins Go Mainstream: https://www.cnbc.com/2025/06/28/stablecoin-visa-mastercard-circle-jpmorgan.html

• Visa Investor Relations: Stablecoin Settlement Expansion: https://investor.visa.com/news/news-details/2025/Visa-Expands-Stablecoin-Settlement-Support/default.aspx

• CoinDesk: Visa $3.5B Stablecoin Settlement: https://www.coindesk.com/business/2025/12/16/visa-brings-circle-s-usdc-settlement-to-u-s-banks-following-usd3-5-billion-stablecoin-pilot

• Modern Treasury: Stablecoins in B2B and B2C Payments: https://www.moderntreasury.com/journal/stablecoins-in-action-b2b-and-b2c-payments

• Dealroom: Bitso Company Profile: https://app.dealroom.co/companies/bitso

• FintechMagazine: Stripe Bridge Acquisition: https://fintechmagazine.com/articles/stripe-completes-us-1-1bn-bridge-acquisition

• CEMLA: Stablecoins in Latin America and the Caribbean: https://www.cemla.org/fintech/docs/stablecoins-in-latin-america-and-the-caribbean.pdf

• CoinDesk: Tether Launches Mexican Peso Stablecoin MXNT: https://www.coindesk.com/business/2022/05/26/tether-enters-latin-america-with-mexican-peso-pegged-stablecoin

• CoinDesk: Bitso Launches MXNB Stablecoin: https://www.coindesk.com/business/2025/03/26/crypto-exchange-bitso-launches-stablecoin-business-eyeing-latam-cross-border-payments

• Mastercard: Belo Prepaid Card Launch Argentina: https://www.mastercard.com/news/latin-america/es/sala-de-prensa/comunicados-de-prensa/pr-es/2022/febrero/belo-lanza-hoy-al-mercado-la-tarjeta-prepaga-belo-mastercard-en-argentina/

• Fortune: Modern Treasury Acquires Beam: https://fortune.com/crypto/2025/10/22/modern-treasury-beam-stablecoin-startup-acquisition-40-million-all-stock/

• Cointelegraph: Stripe Acquires Privy: https://cointelegraph.com/news/stripe-acquires-privy-crypto-wallet-infrastructure

• IMF: Stablecoin Flows Working Paper: https://www.imf.org/-/media/Files/Publications/WP/2025/English/wpiea2025141-source-pdf.ashx

• Levro: SWIFT Transfer Fees Explained: https://www.levro.com/blog/swift-transfer-fees-explained

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• KuCoin: Circle 1,100+ Enterprise Partners: https://www.kucoin.com/news/flash/circle-expands-usdc-adoption-through-1-100-global-enterprise-partners

• Circle: Ripio Partnership: https://www.circle.com/blog/ripio-partners-with-circle-to-answer-surging-regional-demand-for-digital-dollars

• Business Wire: Conduit $36M Series A: https://www.businesswire.com/news/home/20250528156066/en/Conduit-Raises-$36-Million-Series-A-to-Scale-Use-of-Stablecoins-for-Cross-Border-Payments

• Mural Pay: LatAm Stablecoin Providers Comparison: https://www.muralpay.com/blog/top-stablecoin-providers-in-latam-comparing-costs-speed-and-liquidity

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• PYMNTS: TransNetwork Acquires Inswitch: https://www.pymnts.com/acquisitions/2024/transnetwork-acquires-inswitch-to-facilitate-cross-border-payments-in-latin-america/

• CoinDesk: Tether Invests in Parfin: https://www.coindesk.com/business/2025/11/20/tether-invests-in-latam-crypto-infrastructure-firm-parfin-to-boost-usdt-among-institutions

• CoinDesk: Ripple and Mercado Bitcoin Partnership: https://www.coindesk.com/business/2024/10/03/ripple-partners-with-brazilian-exchange-mercado-bitcoin-to-offer-business-focused-payments-solution

• Circle: Félix Pago Case Study: https://www.circle.com/case-studies/felix

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• Mercado Libre Investor Relations: Q4 2024 Results: https://investor.mercadolibre.com/news-and-events/mercado-libre-delivers-stellar-q4-2024-net-revenue-61-billion-and-net-income-639-million)

• Mercado Libre Investor Relations: Paxos and Mercado Bitcoin Investments: https://investor.mercadolibre.com/news-releases/news-release-details/mercado-libre-announces-investments-mercado-bitcoin-and-paxos

• Bitcoin Treasuries: MercadoLibre Holdings: https://bitcointreasuries.net/entities/mercadolibre

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In the high-stakes world of Brazilian banking, where a handful of giants have long dominated, Nubank has emerged as a disruptive force of unprecedented scale. The fintech's Q2 2025 results were a declaration of victory: $3.7 billion in revenue, $637 million in net income, and a remarkable 28% return on equity (ROE). With 106.5 million customers in Brazil alone, Nubank has fundamentally broken the country's banking oligopoly.

The secret to this disruption lies in a systematic dismantling of the cost structures that traditional banks once considered their greatest strengths. By reimagining banking's core economics, Nubank has achieved an efficiency ratio of 28.3%, giving it a stunning 8 to 27 percentage point advantage over its competitors. This is not a marginal improvement, but a structural schism that compounds with scale.

The magnitude of this transformation becomes clear when comparing Nubank's performance against Brazil's banking establishment across key financial metrics.

While Nubank's absolute revenue and net income are still catching up, its performance metrics reveal a company on an unstoppable trajectory. It is growing revenue at 40% YoY, more than double its closest competitor, while its 28% ROE demonstrates best-in-class capital efficiency. Most critically, its 28.3% efficiency ratio is a structural advantage that turns every dollar of growth into profit far more effectively than any incumbent.

Let's examine how Nubank achieved this by systematically winning across the four cost pillars that traditional competitors cannot replicate.

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The four cost pillars: Nubank's blueprint for disruption

Nubank's transformation of Brazilian banking comes from a forensic reimagining of the industry's cost structures. Where traditional banks saw moats in their branch networks and regulatory history, Nubank saw liabilities in the digital age. This four-pillar framework unpacks how Nubank systematically turned each of the incumbents' perceived strengths into a weakness.

Cost pillar I: Cost to serve - digital architecture vs. legacy burden

TThe numbers reveal the true magnitude of Nubank's architectural advantage. With zero physical branches and just 8,000 employees serving 106.5 million customers in Brazil, Nubank has created a cost structure that traditional banks cannot match without abandoning their core business model. Each Nubank employee serves 15,338 customers while generating approximately $1.73 million in annualized revenue. This level of productivity exposes the fundamental inefficiencies of branch-based banking.

In contrast, Bradesco's 82,147 employees each serve only 900 customers and generate just $0.3 million in revenue. This 20x difference in customer service efficiency and 5x difference in revenue per employee isn't just about being lean. It represents a fundamentally different operating model that scales exponentially rather than linearly. When Nubank adds customers, the marginal cost approaches zero. When traditional banks add customers, they often need more branches, more staff, and more infrastructure.

The Cost to Serve metric crystallizes this advantage. At approximately $28.3 per customer annually, Nubank operates at a fraction of the cost of incumbents. Itaú's $218.6 per customer annually reflects the enormous burden of maintaining 42,900 branches and ATMs, while Caixa's $259.4 annually stems from its social banking mandate and massive physical footprint. These are not simply operational inefficiencies that can be optimized away, but rather structural constraints embedded in legacy business models.

Cost pillar II: Cost of risk - data-driven precision underwriting

Nubank's approach to risk management demonstrates how superior data analytics can transform traditional banking economics. While its NPL >90 days ratio of 6.6% appears higher than some competitors, this reflects a strategic choice to serve underbanked populations that traditional banks have historically excluded. The crucial insight lies in Nubank's 228% provision coverage ratio, the highest among major competitors, which shows the company proactively manages risk rather than simply avoiding it.

This conservative provisioning enables Nubank to achieve a risk-adjusted Net Interest Margin (NIM) of 9.2%, the best in the sector. Compare this to Banco do Brasil's 3.3% risk-adjusted NIM, which suggests the state-owned bank is taking on risk without adequate compensation. Nubank's 44% credit growth, the fastest among peers, proves that superior risk models enable both growth and profitability simultaneously.

The data advantage compounds over time. Every transaction, every interaction, and every payment creates additional data points that improve Nubank's underwriting models. Traditional banks have transaction data, but they lack the integrated view that comes from controlling the entire customer experience through a single digital platform. This data moat deepens with scale, creating a virtuous cycle where better data enables better risk pricing, which attracts more customers and in turn generates more data.

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Cost pillar III: Cost of funding - diversified and efficient capital

Nubank has revolutionized banking funding by breaking the industry's dependence on expensive retail deposits gathered through branch networks. Its unique use of FIDCs (securitized credit funds) for 35% of funding represents a structural innovation that traditional banks cannot easily replicate. This diversification allows Nubank to access institutional capital markets directly, reducing its funding costs and insulating it from the operational expenses of gathering retail deposits.

At 5.17%, Nubank's cost of funds compares favorably to most competitors, despite being higher than Banco do Brasil's government-subsidized 3.94% rate. More importantly, Nubank's funding model scales without the linear cost increases that plague branch-based deposit gathering. When traditional banks need more funding, they often must open more branches, hire more staff, and offer higher deposit rates. In contrast, Nubank can access capital markets directly.

The 15.7% CET1 ratio, highest among peers, provides strategic flexibility and lowers the cost of both regulatory capital and market funding. This capital strength becomes self-reinforcing as Nubank's growth generates internal capital, reducing dependence on external funding sources over time.

Cost pillar IV: Cost of acquisition - the viral growth engine

The customer acquisition metrics reveal perhaps the most devastating advantage in Nubank's arsenal. At $19.2 per net new customer, Nubank acquires customers at a fraction of the cost of traditional banks. Bradesco spends $91.3 per net customer acquisition, while Itaú spends $114.6. Most tellingly, Santander spent $54.4 million in the first half of 2025 only to achieve zero net customer growth, indicating its marketing budget was entirely consumed by offsetting churn.

This efficiency stems from Nubank's product-led growth model, where a superior user experience creates organic viral effects. When customers love the product, they become brand ambassadors, which reduces the need for paid marketing. Traditional banks must pay continuously for customer acquisition because their products do not create the same organic advocacy. This creates a compounding disadvantage where incumbents must spend more to achieve less.

The 5.8 million net new customers Nubank added in the first half of 2025 represent not just growth, but capital-efficient growth. Each new customer acquired at $19.2 will likely generate hundreds of dollars in lifetime value, creating a massive return on marketing investment that traditional competitors cannot match.

The unstoppable flywheel: How four pillars create insurmountable moats

When analyzed in isolation, each cost pillar represents a significant competitive advantage. Together, they create a self-reinforcing flywheel that becomes increasingly difficult for competitors to disrupt. The digital architecture enables superior data collection, which improves risk pricing. This in turn attracts more customers at lower costs, which generates more data, reduces per-customer service costs, and enables even better pricing and products.

This flywheel effect explains why Nubank's advantages are widening rather than narrowing. The 28.3% efficiency ratio is more than a metric; it is the output of a system where each additional customer makes the entire platform more efficient. Traditional banks face the opposite dynamic. Each new customer increases their operational complexity and cost base, creating diseconomies of scale in a digital world.

The moats surrounding this system are multifaceted. The data moat grows stronger with every transaction. The cost moat deepens as fixed technology investments are spread across more customers. The brand moat strengthens as customer satisfaction creates organic growth. Most importantly, the strategic moat widens as traditional competitors face the innovator's dilemma. They cannot abandon their branch networks without losing existing customers, yet maintaining them ensures a permanent cost disadvantage.

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Investment analysis: Platform economics in public markets

With Nubank trading at approximately $14.95 per share as of late 2025, representing a market capitalization of roughly $71.6 billion, investors face a valuation that reflects both tremendous growth potential and execution risk. The stock's assessment requires understanding that Nubank operates on platform economics rather than traditional banking metrics, making conventional valuation approaches inadequate.

The bullish scenario centers on Nubank's ability to expand its economic moats while capturing more value per customer. As the company penetrates secured lending, insurance, and investment products, its Average Revenue Per Active Customer (ARPAC) should grow from the current $12.2 toward the $25-30 range achieved by mature digital platforms. The 40% revenue growth rate, combined with expanding margins from operational leverage, could sustain 25-30% annual earnings growth for several years. In this scenario, the premium valuation is justified by software-like margins and network effects that traditional banks cannot replicate.

However, the incumbent response poses the primary risk to this thesis. Itaú Unibanco has emerged as the most credible digital challenger by migrating 60% of its infrastructure to AWS and developing over 1,300 AI models through its partnership with Stanford's Human-Centered AI Institute. The bank's $18 million investment in NeoSpace, a generative AI startup, and its comprehensive digital transformation have reduced customer-impacting incidents by 98% while cutting deployment cycles from months to days. With 17,000 technology professionals, including 5,900 AWS-certified engineers, Itaú is building the technical capabilities to compete with Nubank's digital advantages.

Bradesco's response has been equally aggressive. The bank's AI assistant, BIA, now handles millions of customer interactions with an 82% first-level resolution rate, while generative AI integration has increased manager usage 8x. The partnership with Microsoft Azure has enabled Bradesco to achieve 89% customer retention rates in digital channels, directly competing with Nubank's customer experience advantages. These efforts represent more than incremental improvements, signaling a fundamental shift in how traditional banks approach technology.

Banco do Brasil's partnership with Mila, Quebec AI Institute, and its expansion of AI solutions by 130% over three years demonstrate that even state-owned incumbents are investing heavily in digital capabilities. The bank's integration of generative AI for micro and small business recommendations, combined with automated identity verification systems that save over 40 hours of work per customer, shows how incumbents are leveraging their existing customer relationships and data assets.

The bear case acknowledges that these digital initiatives could slow Nubank's market share gains more than expected. If traditional banks successfully reduce their cost-to-serve through AI and automation while leveraging their massive customer bases for cross-selling, Nubank's growth premium could compress significantly. A prolonged economic downturn in Brazil would also disproportionately impact Nubank's loan portfolio, given its focus on previously underbanked customers.

The base case assumes gradual market maturation where Nubank maintains its structural advantages while facing increased competition from digitally transformed incumbents. Revenue growth moderates to the 20-25% range as the Brazilian market saturates, but expanding ARPAC and international growth in Mexico and Colombia sustain premium valuations. The efficiency gap remains significant but stabilizes as incumbents achieve partial digital transformation.

For investors, the key variables are the speed of incumbent digital transformation and Nubank's ability to expand internationally and into new product categories. The company's systematic approach to dismantling traditional banking cost structures provides a durable competitive advantage, but the ultimate valuation will depend on how effectively traditional banks can respond with their own digital transformations.

Conclusion: The new rules of banking

Nubank's systematic dismantling of Brazil's banking oligopoly reveals a fundamental truth that the old moats have become anchors. This optimization across four pillars, resulting in a 95% lower cost to serve, 5x better unit economics, unique funding access, and viral growth, creates competitive advantages that are not just sustainable but also expanding.

The data speaks definitively. With a 28% ROE and 28.3% efficiency ratio, Nubank is not just winning but rewriting the rules of the game. Traditional banks, burdened by their physical infrastructure and legacy technology, face the innovator's dilemma. They cannot abandon their old models without alienating existing customers, yet maintaining them ensures a permanent cost disadvantage.

Yet the competitive response is real and accelerating. The incumbents' massive investments in AI, cloud computing, and digital transformation represent more than defensive measures; they signal a recognition that the future of banking will be determined by technological capability rather than regulatory protection or physical presence. The question is no longer whether digital transformation is necessary, but whether it can be executed quickly enough to close the gap with Nubank's native advantages.

This transformation extends beyond Brazil. Across global financial markets, the institutions that master platform economics, data-driven decision-making, and viral customer acquisition will define the next era of banking. For investors, this represents not just a sector rotation but a fundamental shift from industrial-age banking to platform-age financial services. The winners will be those who recognize that in the digital economy, the most efficient platforms capture disproportionate value, while legacy players face inexorable margin compression.

Nubank operates on platform economics while its competitors remain bound by industrial-age constraints. This transformation goes beyond disruption to represent a secular shift toward a future where the most efficient platforms dominate financial services. The companies that adapt to these new rules will thrive; those that do not will find themselves increasingly irrelevant in a world where customers expect banking to be as seamless as any other digital experience.

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Disclaimer: This analysis is for informational purposes only and does not constitute financial or investment advice. Always conduct your own research and consult with qualified financial professionals before making investment decisions.

Sources:

• Nu Holdings Ltd. Q2 2025 Financial Results and SEC Filings

• Itaú Unibanco Q2 2025 Earnings Reports

• Banco Bradesco Q2 2025 Financial Statements

• Banco do Brasil Q2 2025 Results

• Santander Brasil Q2 2025 Financial Reports

• Caixa Econômica Federal Q1 2025 Results (latest available)

• Market cap data from Yahoo Finance (September 2025)

• Bank ranking from Banco Central do Brasil (September 2025)

Exchange Rate Note: All BRL figures converted to USD using 5.5 BRL = 1 USD (approximate Q2 2025 exchange rate) for consistent analysis across all banks.

The venture capital orthodoxy is clear: diversification reduces risk. Dave McClure, founder of 500 Startups, famously argued that if unicorns happen 1-2% of the time, "it is logical to adopt a portfolio size that includes at least 100 companies" to maximize the chance of investing in that mystical unicorn. The math seems sound: cast a wide net, and you're more likely to catch the big fish.

But a decade of Latin American Series A data tells a radically different story. The most successful investors in the region aren't the ones following diversification strategies. They're the ones who've mastered the art of selection because in emerging markets, there simply aren't enough high-quality opportunities to diversify meaningfully.

While this analysis focuses specifically on Latin America, it suggests that emerging markets may operate under fundamentally different dynamics than mature venture ecosystems, potentially challenging conventional assumptions about optimal portfolio construction.

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The Selection Champions

Consider the starkest example: Sequoia Capital made exactly two Series A investments in Latin America between 2014-2024. Both became unicorns. Nubank (valued at $61B) and Rappi (valued at $5.25B). That's a 100% hit rate achieved through surgical precision, not portfolio diversification.

Compare this to high-volume local approaches:

• Monashees: 81 investments → 4 unicorns (4.9% conversion)

• Kaszek: 63 investments → 6 unicorns (9.5% conversion)

• Valor Capital Group: 57 investments → 3 unicorns (5.3% conversion)

The pattern reveals a strong negative correlation (-0.566) between portfolio size and hit rate—exactly the opposite of what diversification theory would predict. When you dig into the numbers, something fascinating emerges.

Highly Selective (2-4 investments):

• Sequoia: 2 investments → 100% hit rate

• GIC: 2 investments → 100% hit rate

• General Atlantic: 4 investments → 50% hit rate

Moderately Selective (6-19 investments):

• Accel: 6 investments → 33% hit rate

• a16z: 10 investments → 30% hit rate

• Quona Capital: 19 investments → 21% hit rate

High Volume (25+ investments):

• QED: 25 investments → 8% hit rate

• Redpoint eVentures: 30 investments → 7% hit rate

• Kaszek: 63 investments → 10% hit rate

• Monashees: 81 investments → 5% hit rate

When the global average for unicorn creation is 0.5-2.5%, seeing multiple funds achieve 30-100% hit rates suggests they're not just outperforming. They're operating in a fundamentally different opportunity environment that rewards selection over diversification.

This raises an important question: What if the conventional wisdom about portfolio construction doesn't apply universally?

Why Emerging Markets Break the Diversification Model

Dan Gray's mathematical analysis, featured on TBPN where he spoke about portfolio construction in VC, makes a compelling case for diversification. Drawing on data from CB Insights, AngelList, and Stanford, he demonstrates that unicorn outcomes occur in just 0.5-2.5% of seed-stage investments.

Gray's argument is mathematically sound: "There's a ~0.5–2.5% chance that a venture backed company, at seed, will produce a unicorn outcome." He cites multiple sources supporting this range: "Ilya Strebulaev (GSB Professor & Researcher): 0.5%, AngelList (Top Startup & VC Fundraising Platform): 2.5%, CBinsights (Top Startup & VC Research Firm): 1.28%."

His core thesis is that since "most VCs are willing to admit they really can't predict which of their investments will be a winner," the solution is portfolio construction over picking. Gray argues that "if we verge towards generous and assume a 2% hit rate, the conclusion should be that seed managers should probably target at least 50 investments, to optimise for at least one unicorn."

Through portfolio modeling, Gray demonstrates that diversified approaches (100 investments) consistently outperform concentrated ones (20 investments) across multiple metrics, concluding that "VCs cannot reliably pick winners. They can, however, construct portfolios that consistently generate great returns."

But these assumptions break down completely in emerging markets like Latin America:

Opportunity Scarcity: LatAm produced only 39 unicorns over 10 years (3.9 per year average), with three consecutive years (2022-2024) producing zero billion-dollar outcomes. Gray's diversification model assumes abundant opportunities where you can realistically deploy 50-100 investments. In emerging markets with severe scarcity, diversifying across 100+ companies becomes mathematically impossible when there are only 3-4 real unicorn opportunities per year.

Non-Uniform Distribution: The opportunities aren't evenly distributed over time. In 2016, LatAm produced 15 unicorns; in 2017, zero. This boom-bust cycle means timing and selection matter exponentially more than diversification. Unlike mature markets where Gray's baseline applies broadly across hundreds of opportunities, emerging markets exhibit extreme winner-take-all dynamics that defy statistical modeling.

Infrastructure Gaps: Gray's diversification theory assumes follow-on capital and market infrastructure exist to support portfolio companies through multiple rounds. In emerging markets, these often don't exist, making initial selection and intensive support far more critical than portfolio breadth. The mathematical assumptions underlying diversification theory simply don't hold when the supporting ecosystem is absent.

The opportunity gap becomes even starker when compared to mature markets. According to Tracxn data, the US alone produced 974 unicorns from 2014-2024—an average of 88.5 per year. This means the US produces 22.6x more annual unicorn outcomes than Latin America (88.5 vs 3.9 per year), creating the abundant opportunity environment that Gray's diversification model requires.

The math tells a clear story about opportunity density—mature markets like the US provide abundant opportunities that theoretically support diversification strategies, while emerging markets like Latin America simply don't have enough high-quality opportunities to make diversification mathematically viable.

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A Counterpoint: Even Mature Markets Reward Selection

But here's where it gets interesting: even in mature markets with abundant opportunities, selection often outperforms diversification.

Martin Mignot, Partner at Index Ventures, revealed compelling data on the 20VC podcast with Harry Stebbings that challenges Gray's diversification thesis even in mature markets. Despite operating in opportunity-rich environments like the US and Europe, Index maintains a highly concentrated approach that has generated exceptional returns.

"We've been around for 30 years. We invested 11.5 billion. We've returned close to 30 and we still have 20 plus in holdings," Mignot disclosed. "Most of that is basically concentrated in eight nine companies. We've invested in probably 300 close to 400 companies over the years."

The math is striking: 8-9 companies driving returns out of 400 total investments represents a 2.25% concentration rate—remarkably close to Gray's cited unicorn baseline rates, yet achieved through selective entry rather than portfolio construction after the fact.

Index's stage breakdown reveals their concentrated approach: "Seven out of 10 Index's investments originated at Seed or Series A (55% when excluding Seed)." This translates to approximately 126 seed investments (4.2 per year) and 154 Series A investments (5.1 per year) over 30 years—far below Gray's recommended 50+ annual investments, even while operating across multiple geographies.

Their selectivity has paid off dramatically. Index's lead Series A investment in Revolut generated approximately ~2,500× returns. Index leading Figma's seed round returned 18x their entire fund size. These outcomes weren't achieved through broad diversification, but through surgical precision in company selection.

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The Thiel Fellowship provides another compelling data point: backing just 20 fellows per year, they achieve a 5.9% unicorn rate. This is nearly 3-10x higher than the baseline rates Gray cites for broad market performance. Their concentrated approach in a mature market (primarily US) demonstrates that selectivity can dramatically outperform broad diversification even when opportunities are abundant.

In public markets, the same pattern emerges: just 7 companies (the "Magnificent 7") drove most S&P 500 returns while 493 companies barely moved. Concentration of value appears to be the rule, not the exception, across all asset classes.

What This Reveals About Market Structure

As Latin American startup valuations compressed post-2022, the advantages of selective strategies became more apparent. In a market where follow-on funding became scarce and survival required excellence, portfolio companies needed investors who could provide more than capital.

The global VCs who maintained strong performance through the recent downturn did so precisely because their selective approach generated returns that justified continued LP support. Meanwhile, many high-volume local funds faced challenges raising new capital as their diversified portfolios showed limited differentiation in performance.

This data doesn't diminish the important ecosystem-building role that local VCs play. However, it does reveal objective patterns about how market structure shapes optimal investment approaches.

The venture capital consensus favoring diversification developed in mature markets with abundant opportunities and established support infrastructure. But in emerging markets like Latin America, where opportunities appear more scarce and success requires intensive support, selection emerges not just as an alternative strategy, but as a demonstrably effective approach based on the available performance data.

The question for the industry isn't whether selection is theoretically superior to diversification across all markets. The question is understanding when and where each approach tends to generate the best risk-adjusted returns for the specific market structure at hand.

In markets with opportunity abundance and robust infrastructure, diversification may indeed be optimal. But in markets characterized by scarcity and concentration, the data suggests that precision beats breadth.

This has implications beyond Latin America. Any market with limited high-quality opportunities (whether due to geography, sector maturity, or capital constraints) may reward selection over diversification. The key is recognizing which environment you're operating in and adapting your strategy accordingly.

Because ultimately, the market doesn't care about your investment thesis. It only cares about results.

Finding the right company and being selective is what drives returns at the end of the day. The concentration of value in venture capital is universal. The question is whether you achieve it through careful selection or hope to stumble into it through diversification.

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Disclaimer: The views and analysis presented in this article are entirely my personal opinions and should not be construed as investment advice or recommendations. This content is for informational and educational purposes only. All data interpretations, conclusions, and investment strategy assessments reflect my individual perspective and may not represent the views of any organization or institution. Readers should conduct their own research before making any investment decisions.

Sources and Data

• Latin American VC Series A data (2014-2024) by Emerging Fintech

• Dan Gray Twitter thread on portfolio concentration: https://x.com/credistick/status/1790475066843083230

• Dave McClure: "99 VC Problems But A Batch Ain't One: Why Portfolio Size Matters For Returns"

• Ulu Ventures: "Picking Winners Is A Myth"

• AngelList: "What Percentage of AngelList Seed-Stage Startups Become Unicorns?"

• Ilya Strebulaev LinkedIn post: "Unicorn Probability by Funding Round" (Stanford research)

• CB Insights: "Your Startup Has a 1.28% Chance of Becoming a Unicorn"

• CB Insights: "The Venture Capital Funnel"

• OpenLP/Jessica Archibald post on fund returners: https://x.com/Open_LP/status/1877099984283123851

• Harry Stebbings post on predicting outcomes: https://x.com/HarryStebbings/status/1918761235459297622

• Sequoia Capital Nubank profile: https://www.sequoiacap.com/companies/nubank/

• Sequoia Capital Rappi profile: https://www.sequoiacap.com/companies/rappi/

• Sequoia Capital: "The Latin American Startup Opportunity" - 2024

• Index Ventures performance data: Martin Mignot interview on 20VC podcast with Harry Stebbings

• Tracxn: Unicorn startups in the United States (August 2025)

Ana Zucato is the co-founder and CEO of Noh, Brazil's first social fintech built specifically for couples and families. Ana has raised over $3 million in seed funding - one of the largest pre-seed rounds for a female-led company in Latin America - and Noh has already processed over $60 million in transactions with 400,000 app downloads. Before founding Noh, Ana built her career in Brazil's early fintech ecosystem, working at Guiabolso (one of Brazil's open banking pioneers) where she helped grow the platform to 6 million users, followed by roles at Intuit and as country manager for Colombian company Truora's Brazil expansion. Ana discovered the idea for Noh through personal experience - realizing there was no good way for couples to manage money together in Brazil, where joint accounts were still designed with women as "second-class citizens." In this episode, we discuss how Ana identified and validated this overlooked market, the unique challenges of building a "multiplayer" financial product, and her vision for transforming how Brazilian families manage their entire financial lives.

In this conversation, you'll learn:

1. How Ana discovered that joint accounts in Brazil were designed for "one person plus a second person" - historically women who weren't allowed their own bank accounts

2. The manual validation process of funding 50 couples' spending with her own money while embedding in their WhatsApp groups

3. Why Ana calls Noh a "social fintech" and how it mirrors the way Latin Americans actually live their interconnected lives

4. How Brazil's PIX instant payment system and payment initiation through open banking became the foundation for Noh's multiplayer banking experience

5. The clever marketing strategy behind becoming Brazil's first white debit card to spark curiosity and word-of-mouth growth

6. Ana's radical transparency approach where all employees know everyone's salaries, read the company P&L, and participate in every major decision

7. How content creation and a reality show featuring real couples helped Noh go viral on social media

8. Why the average Brazilian household has seven different bank accounts and Ana's vision to consolidate everything into "one Noh"

9. The evolution from couples banking to becoming the financial operating system for entire Brazilian families including kids and elderly parents

10. Ana's philosophy that AI should maximize your money's value rather than replicate your (financially "stupid") brain

11. How Ana's fundraising experience differed from expectations and her advice for fintech entrepreneurs pitching in today's market

12. The importance of separating "signal from noise" when building something truly new and why Ana stopped reading business books

13. Her backup career plans: becoming Brazil's president or running a neighborhood hair salon - both with the same commitment to transparency

Where to find Ana Zucato

• LinkedIn: https://www.linkedin.com/in/anazucato/

• Instagram: https://www.instagram.com/azucato/

• TikTok: https://www.tiktok.com/@anadanoh

Where to find Noh:

• Website: https://www.noh.com.br/

• TikTok: https://www.tiktok.com/@fazumnoh

• Instagram: https://www.instagram.com/fazumnoh/

Where to find Tony Cueva Bravo:

• Newsletter: https://emergingfintech.co

• X: https://x.com/tonycueva

• LinkedIn: https://linkedin.com/in/tonycueva

In this episode, we cover:

(00:00) Episode Highlights

(02:03) Welcome to Emerging Fintech and Ana's Introduction

(04:39) Ana's Journey in Fintech - From E-commerce to Guiabolso

(06:46) Key Lessons from Guiabolso and Intuit

(07:48) Learning Transparency at Truora - Building Philosophy

(10:17) Discovering the Problem - Personal Aha Moment with Joint Accounts

(13:34) The Concept of Social Fintech - Beyond Individual Banking

(16:15) Cultural Dynamics - Banking for Relationships, Not Just Money

(17:37) Leveraging Open Banking and PIX for Innovation

(20:15) Expanding Beyond Accounts - Investment and Financial Stack

(22:13) User Acquisition Strategy - The White Card and Word-of-Mouth

(27:17) Social Media Strategy - Authenticity and Reality Shows

(30:03) Vision for Multiplayer Banking - The Future of Household Finance

(30:23) Vision for the Future of Noh

(32:14) Five-Year Vision - Organizing Brazilian Family Finances

(34:11) Fundraising Experience - $3M Seed Round Success

(36:47) Fundraising Advice - Industry Fit and Hair-on-Fire Problems

(39:32) Building the Right Team - MVT (Minimum Viable Team)

(41:26) Core Values in Practice - Proposals and Customer Focus

(44:15) Radical Transparency - Open Numbers and Company Culture

(48:33) Scaling Transparency - Maintaining Culture as You Grow

(50:35) Leadership Challenges - Learning to Delegate and Ask for Help

(52:11) Best Career Advice - Separating Signal from Noise

(55:17) AI and the Future of Fintech - Automation vs. Human Touch

(01:00:34) Final Question - Alternative Paths if not building Noh

(01:02:30) Closing Thoughts and Thank You

The global payments landscape is approaching an inflection point. While instant payment systems have proliferated across major economies—India's UPI processing 12 billion transactions monthly, Brazil's PIX handling 5 billion, and the U.S. Federal Reserve's FedNow gaining adoptio n—these systems remain largely isolated from one another.

A new technical standard being developed by the Accredited Standards Committee X9 could change that. The X9 Standard Payment QR Code, currently in development since August 2024, aims to create a universal protocol for payment requests that works across any rail, any currency, and any jurisdiction. Matera CEO Carlos Netto recently outlined his vision for how this standard could enable truly global payment interoperability, but the broader implications extend far beyond any single company's perspective.

The standard represents more than incremental innovation. It could fundamentally alter competitive dynamics in an industry where geographic expansion has traditionally required years of integration work and regulatory compliance across multiple jurisdictions.

The Scale of Payment Fragmentation

The disparity in instant payment adoption reveals the extent of global fragmentation. India processes over 12 billion instant payments monthly through UPI, while Brazil handles 5 billion via PIX. In contrast, the United States—despite having the world's largest economy—processes just 30 million instant payments monthly through its newer FedNow system.

This fragmentation creates significant friction for cross-border commerce. Account-to-Account (A2A) payment volumes are projected to grow from $1.7 trillion in 2024 to $5.7 trillion by 2030, according to Juniper Research. However, current growth is constrained by the complexity of connecting disparate payment systems across borders.

Consider the technical challenges facing a merchant seeking to accept payments globally today. Supporting customers in Brazil requires PIX integration. Serving Indian customers demands UPI compatibility. Accepting payments from European customers requires SEPA connectivity. Each integration involves separate APIs, compliance requirements, and settlement processes.

The X9 Standard proposes to solve this through what amounts to a universal translation layer. A single payment request could simultaneously offer multiple settlement options—PIX for Brazilian customers, UPI for Indian users, FedNow for Americans, and USDC on blockchain networks for customers in regions lacking advanced payment infrastructure.

Infrastructure Convergence

Several technological and regulatory developments are creating the foundation for this type of interoperability. The European Union's SEPA Instant regulation, which mandated real-time payment capabilities by January 2025, has accelerated instant payment adoption across 27 countries. India's UPI has begun establishing bilateral connections with other national payment systems, including Singapore's PayNow and France's Lyra network.

Meanwhile, stablecoin infrastructure has matured to the point where USDC transactions on networks like Polygon or Solana settle faster and cheaper than traditional correspondent banking arrangements. The X9 Standard's rail-agnostic approach means these blockchain-based settlement options receive equal treatment alongside traditional banking rails.

This convergence creates interesting dynamics for financial institutions. Banks implementing X9 compatibility early could offer merchants significantly enhanced value propositions—the ability to accept payments from customers worldwide without the traditional complexity of multi-rail integration.

Competitive Implications

The standard threatens to commoditize what has been a key competitive advantage for payment processors: the ability to navigate integration complexity. Companies like Stripe built significant market positions by offering "one API" access to multiple payment methods. PayPal's cross-border payment revenues depend partly on the difficulty of alternative international transfer methods.

When payment requests can automatically include multiple settlement options through a standardized protocol, the value of proprietary integration platforms diminishes. Any bank or fintech company supporting the X9 Standard could theoretically offer global payment acceptance capabilities.

This shift could be particularly significant for emerging market financial institutions. A Nigerian fintech optimized for local mobile money could suddenly accept payments from European customers via SEPA Instant or American customers through FedNow—without building separate integrations for each market.

The pattern extends beyond payment processors to adjacent services. Fraud detection companies, reconciliation software providers, and compliance platforms that align with X9 Standard architecture gain automatic global scalability. Those that don't risk being limited to regional markets while competitors achieve worldwide reach.

The Stablecoin Integration

Perhaps the most significant aspect of the X9 Standard is its treatment of blockchain-based payment rails as equivalent to traditional banking infrastructure. For merchants, this creates unprecedented optionality in how they receive payments.

When a payment request automatically includes both traditional bank settlement options and stablecoin alternatives like USDC, customers can choose based on speed, cost, and convenience rather than technical complexity. A customer in a country with limited banking infrastructure might prefer to pay with USDC on a public blockchain, while another customer might use their domestic instant payment system.

This integration could accelerate mainstream adoption of blockchain-based payments by removing the technical barriers that currently limit their use to crypto-native users. When paying with stablecoins becomes as simple as scanning a QR code and selecting from available options, the distinction between "traditional" and "crypto" payments becomes largely irrelevant to the user experience.

Network Effects and Adoption

The success of the X9 Standard depends on achieving critical mass among financial institutions, merchants, and application developers. Network effects work strongly in favor of early adopters—each additional participant increases the value of the network for all existing participants.

Banks implementing X9 support first gain access to globally-minded merchants who prioritize international customer reach. Merchants adopting X9-compatible payment systems access customer bases previously unreachable due to payment friction. Software developers building X9 support into their applications create products that become more valuable as network adoption increases.

The timing appears favorable for rapid adoption. Major instant payment systems are already operational or expanding globally. Regulatory frameworks for real-time payments are becoming standardized. Stablecoin infrastructure has proven capable of handling significant transaction volumes.

Strategic Considerations

The X9 Standard development process remains open to industry participation, with the committee actively seeking input from financial institutions, merchants, and payment service providers. Companies engaging with the standard now can influence its final specifications while positioning for first-mover advantages.

The alternative is potentially costly. As global payment interoperability improves through standardization, companies limited to regional payment capabilities may find themselves competing against organizations with automatic worldwide reach. The competitive disadvantage could prove difficult to overcome, particularly for companies in smaller markets.

Traditional payment industry leaders face more complex strategic decisions. Their existing advantages in areas like fraud detection, customer experience, and financial product innovation remain valuable. However, competitive moats built around payment integration complexity may erode as standardization reduces technical barriers.

Market Transformation

The broader implications extend beyond individual company strategies to the structure of global commerce itself. When payment friction between countries decreases significantly, it could accelerate international trade, particularly for smaller businesses that currently find cross-border commerce prohibitively complex.

Global cashless payment volumes are projected to increase by more than 80% from 2020 to 2025, reaching nearly 1.9 trillion transactions. The X9 Standard's potential to reduce cross-border payment complexity could accelerate this growth while creating substantial value for companies positioned correctly.

The protocol represents infrastructure innovation rather than application innovation—similar to how TCP/IP enabled the internet's applications rather than creating them directly. The companies that benefit most will likely be those that recognize this infrastructure shift early and build their strategies accordingly.

As the X9 Standard development continues through 2025, the payments industry faces a fundamental question: whether to embrace standardization that reduces competitive barriers but expands market opportunities, or to preserve existing advantages while potentially missing the global interoperability transition.

The answer will likely determine which companies define the next phase of global payments infrastructure.

Sources

Primary Industry Data:

• Accredited Standards Committee X9. "X9 Launches Effort to Create Payment QR Code Standard." August 13, 2024.

• Accredited Standards Committee X9. "X9 Publishes Standard for QR Code Protection Using Cryptography." January 7, 2025.

• Juniper Research. "Account-to-Account Payments: Market Forecasts, Competitor Leaderboard & Future Opportunities 2024-2030." 2024.

Payment System Statistics:

• Reserve Bank of India. "Annual Report on Payment and Settlement Systems 2023-24." RBI, 2024.

• Banco Central do Brasil. "PIX Statistics and Transaction Data." BCB, 2024.

• Federal Reserve Banks. "FedNow Service Adoption and Transaction Volume Reports." Federal Reserve, 2024-2025.

Market Analysis and Projections:

• McKinsey & Company. "Global Payments in 2024: Simpler Interfaces, Complex Reality." October 2024.

• PwC and Strategy&. "Payments 2025 and Beyond: Global Cashless Payment Volume Analysis." 2024.

• Capgemini. "World Payments Report 2025." March 2025.

Regulatory and Infrastructure Development:

• European Central Bank. "SEPA Instant Credit Transfer Scheme Implementation." ECB, 2024.

• European Payments Council. "Verification of Payee Scheme Implementation Guidelines." EPC, 2024.

• Mastercard. "10 Top Payment Trends for 2025 and Beyond." December 2024.

Cross-Border Payment Innovation:

• Netto, Carlos. "The Future of Global Payments: Push, Real-Time, and Open." LinkedIn, June 29, 2025.

• Visa. "From AI to RTP: Top Trends Shaping 2025 Payments." Corporate Insights, 2025.

• Red Compass Labs. "2025 Payments Trends: What's in Store?" January 29, 2025.

Blockchain and Stablecoin Infrastructure:

• Digital Transactions. "X9 Issues QR Code Standard and Other Digital Transactions News." January 7, 2025.

• American Banker. "A Unified Standard for QR Codes is the Next Step in Real-Time Payments." October 24, 2024.

This analysis is for informational purposes only and does not constitute financial or investment advice. Always conduct your own research and consult with qualified financial professionals before making investment decisions.

Benjamin Gleason is the co-founder and CSO of Kamino, a financial operations platform serving over 1,500 Brazilian SMBs. Before founding Kamino, Benjamin co-founded GuiaBolso, one of Brazil's first open banking pioneers, which he successfully sold to PicPay after reaching 6 million active users. He also served as CFO at Groupon Brazil during its explosive growth phase and has been building businesses in Brazil for over 17 years. A Wisconsin native who moved to Brazil and never left, Benjamin has become a serial entrepreneur deeply embedded in the country's fintech ecosystem. In this episode, we discuss how Benjamin spotted massive opportunities in emerging markets, the unique challenges of building fintech infrastructure in Brazil, and the mindset shifts required to succeed as a repeat entrepreneur.

In this conversation, you'll learn:

1. Why you can solve much bigger problems in Brazil and emerging markets compared to Silicon Valley

2. How Benjamin bet his entire company on building "impossible" open banking technology before it was regulated

3. The story behind going from 10,000 to 1 million users in just six months through viral mobile growth

4. How GuiaBolso survived being sued by Brazil's biggest bank by creating an unbreakable shield of 6 million user supporters

5. Why Benjamin believes competing fintechs means both companies are probably screwed - and what market size really means

6. The three layers Kamino uses to transform SMB finances: efficiency, control, and visibility

7. How Kamino helped a Series B healthtech company go from being "completely underwater" to fully automated in just three weeks

8. Why 60-80% of Brazil's GDP is generated by SMBs still managing finances manually with Excel

9. The philosophy of "easy decisions, hard life, hard decisions, easy life" and why it guides every major business choice

10. Why you can't successfully launch in Brazil from outside the country - and the importance of boots on the ground in emerging markets

11. How Benjamin transitioned from a successful exit directly into co-founding Kamino with former Groupon colleagues

12. His contrarian prediction that traditional banks will become mere utilities in the next decade

Where to find Benjamin Gleason:

• LinkedIn: https://www.linkedin.com/in/benjamingleason/

Where to find Kamino:

• Website: https://www.kamino.com.br

• LinkedIn: https://www.linkedin.com/company/kaminolatam/

Where to find Tony Cueva Bravo:

• Newsletter: https://emergingfintech.co

• X: https://www.x.com/tonycueva

• LinkedIn: https://www.linkedin.com/in/tonycueva

In this episode, we cover:

(00:00) Introduction and Background

(06:12) Cultural Insights: Brazil vs. US

(07:11) Transitioning from Consulting to Fast-Paced Startups

(09:46) Challenges and Lessons from GuiaBolso

(12:36) Navigating Regulatory Challenges in Fintech

(15:35) Achieving Product-Market Fit at GuiaBolso

(18:14) Strategic Exit: Why Sell to PicPay?

(20:55) Founding Kamino: Lessons from GuiaBolso

(25:17) Initial Customer Engagement and Product Development

(29:10) Evolving Focus: From Startups to Medium-Sized Businesses

(31:49) Overcoming Adoption Challenges in Financial Solutions

(33:46) Navigating Brazil's Regulatory Landscape

(36:05) Financial Clarity for SMBs

(37:32) Case Study: Genial Care's Transformation

(39:46) Understanding ERP Adoption in Brazil

(41:32) Team Building and Company Culture Evolution

(43:58) Value Creation and Customer Retention

(46:48) Navigating Economic Volatility

(48:52) The Importance of Cash Flow Management

(50:26) Vision for Kamino's Future

(51:36) Strategic Considerations for Expansion

(53:47) The Future of Financial Management

(56:52) Differentiation in a Crowded Market

(58:45) Lessons from a Serial Entrepreneur

(01:02:33) Advice for Emerging Market Entrepreneurs

December 2024 was supposed to be about Nubank's strategic investment in TymeBank—a $150 million lead in the African digital bank's $250 million Series D round. The financial press covered it as a partnership, analysts called it geographic diversification, and most observers moved on to the next fintech funding story.

They're all missing the bigger picture. This wasn't an investment—it was the opening move in an acquisition that will reshape global digital banking.

By 2027, I predict Nubank will own TymeBank outright in a deal worth $5-8 billion, creating the world's first truly global emerging market fintech empire. The strategic logic is so compelling that the only question isn't whether it will happen, but whether other players will try to outbid them first.

The IPO Timeline Creates the Perfect Storm

TymeBank CEO Coen Jonker has been clear about the company's IPO ambitions, targeting a 2028 New York listing with secondary trading in Johannesburg. On paper, this makes perfect sense—TymeBank has achieved profitability in record time, serves 15 million customers across South Africa and the Philippines, and operates in markets with massive growth potential.

But IPOs create problems that acquisitions solve.

Public markets will demand quarterly earnings growth, geographic expansion timelines, and margin expansion—all while TymeBank is still building foundational infrastructure across two continents. African companies trading on U.S. exchanges historically face valuation discounts, currency volatility concerns, and limited institutional coverage. Even successful IPOs like Jumia have struggled with market perception and operational demands of public ownership.

Nubank solves all of these problems while offering something no public market can: operational expertise from someone who's already done it. With 118.6 million customers generating $13 billion in annual revenue, Nubank has proven the emerging market digital banking model works at massive scale.

Nubank's balance sheet tells the acquisition story better than any strategic memo. With $2.3 billion in excess liquidity at the holding company level and cash generation approaching $2 billion annually, Nubank has the financial firepower for transformational deals.

More importantly, they have the currency advantage. Nubank's stock trades at premium valuations despite crushing every competitor on fundamental metrics. A stock-and-cash deal would allow Nubank to use their "expensive" equity to acquire TymeBank's "cheap" private valuation—classic financial engineering that benefits both sets of shareholders.

Consider the math: TymeBank's current $1.5 billion valuation implies roughly 5x revenue based on their estimated $300 million annual run rate. Nubank trades at 4.5x revenue despite superior margins, larger scale, and proven execution. In an acquisition, Nubank could offer TymeBank shareholders a 50-100% premium while still creating immediate value accretion.

The Pattern Recognition That Makes It Inevitable

Technology history is littered with "strategic partnerships" that became acquisitions once the economics became clear. Amazon invested in Whole Foods before acquiring them for $13.7 billion. IBM invested in Red Hat prior to their $34 billion acquisition. Salesforce invested in Slack before the $27.7 billion deal. This "invest then acquire" strategy allows companies to gain market access, evaluate integration potential, and build relationships before committing to full acquisitions.

Nubank's TymeBank investment follows the same pattern. The $150 million investment provides board representation, operational visibility, and relationship building—exactly what acquirers need to evaluate integration potential and cultural fit.

David Vélez's comments about "sharing learnings of scaling this model to hundreds of millions of customers" sound like partnership language, but they're actually acquisition positioning. You don't spend $150 million to share knowledge—you spend it to build the foundation for deeper integration.

But competitive threats are accelerating. Revolut has announced African expansion plans. JPMorgan Chase is exploring emerging market fintech investments. Chinese technology companies are increasing African financial services investments. The window for acquiring the leading African digital bank at reasonable valuations won't stay open indefinitely.

Nubank faces a classic strategic dilemma: build or buy. Direct African expansion would require 3-5 years, billions in investment, regulatory navigation, and significant execution risk in unfamiliar markets. Acquisition eliminates all of these risks while providing immediate scale.

The Valuation Arbitrage That Seals the Deal

Perhaps the most compelling argument for acquisition comes from simple valuation arithmetic. TymeBank's path to IPO assumes they can achieve public market valuations of $5-10 billion based on projected 2028 financials.

But those projections assume TymeBank continues executing independently. More importantly, public markets will likely undervalue African fintech companies. Despite superior growth rates and earlier profitability, emerging market fintech stocks traditionally trade at discounts to Western competitors. TymeBank's IPO might achieve a $5-7 billion valuation when their fundamentals justify $10+ billion.

Nubank eliminates this valuation gap. They understand emerging market dynamics, recognize TymeBank's strategic value, and have the financial capacity to pay full strategic value rather than accept public market discounts.

The acquisition timeline isn't arbitrary—it's dictated by IPO preparation requirements and strategic positioning needs. TymeBank will begin formal IPO preparation in 2026, including investment banking selection, regulatory filings, and roadshow planning. This creates natural acquisition discussions as strategic alternatives become clear.

Most successful IPO-to-acquisition pivots happen 12-18 months before planned public offerings, putting the optimal acquisition window in 2027. Nubank's competitive positioning demands action by then, before other players recognize the opportunity.

The Empire That Changes Global Finance

A Nubank-TymeBank combination creates something unprecedented in financial services: a digitally-native bank serving 130+ million customers across five countries with expansion potential across Africa, Latin America, and Southeast Asia.

The combined entity would generate $15+ billion in annual revenue with industry-leading efficiency ratios and margin expansion opportunities through shared technology platforms. This scale enables investment in AI, blockchain, and financial products that smaller competitors can't match.

Regulatory influence multiplies across regions. Rather than fighting for regulatory attention as regional players, the combined entity becomes a major financial institution worthy of central bank partnerships and policy collaboration.

Most acquisition predictions are academic exercises—interesting to debate but impossible to act upon. This prediction is different because the setup is already complete.

Nubank has made the initial investment, established the relationship, and demonstrated strategic intent. TymeBank has accepted the partnership, gained access to operational expertise, and begun integration discussions. The financial logic is compelling for both sides, competitive threats are accelerating, and market timing favors acquisition over IPO.

The deal will happen because both sides need it to happen. Nubank needs African exposure for continued growth. TymeBank needs operational scale for competitive sustainability. The financial math works, strategic logic is compelling, and timing creates urgency.

By 2027, when news breaks of Nubank's $5-8 billion TymeBank acquisition, remember you read it here first. Sometimes the biggest deals are hiding in plain sight, disguised as strategic partnerships until the inevitable becomes obvious.

Disclaimer: This analysis is for informational purposes only and does not constitute financial or investment advice. Always conduct your own research and consult with qualified financial professionals before making investment decisions.

Sources

Primary Financial Data:

• Nu Holdings Ltd. Q1 2025 Financial Results and SEC Filings

• TymeBank Series D Funding Announcements (December 2024)

• African Rainbow Capital Investment Portfolio Reports

• Tencent Holdings Ltd. Investment Disclosures

Industry Analysis and Strategic Intelligence:

• Reuters: "Brazilian digital lender Nubank invests $150 million in Tyme Group" (December 17, 2024)

• TechCrunch: "African digital bank Tyme raises $250M round led by Nubank at $1.5B valuation" (December 19, 2024)

• Financial Times: "African Fintech Market Analysis and Growth Projections" (2024)

• McKinsey Global Institute: "Digital Banking in Emerging Markets" (2024)

• PwC: "African Banking Survey and M&A Activity Report" (2024)

Regulatory and Market Data:

• South African Reserve Bank Digital Banking Regulations

• Brazilian Central Bank Cross-Border Investment Guidelines

• U.S. Securities and Exchange Commission Foreign Investment Disclosures

• Various central bank reports on fintech regulation and market development

While the fintech world obsesses over Revolut's global expansion and celebrates Chime's recent path to profitability, the real story of digital banking dominance has been unfolding 5,000 miles south of Silicon Valley. When Nubank launched its first credit card in Brazil in 2014, few predicted this São Paulo startup would become the world's most profitable neobank within a decade. Yet the latest Q1 2025 results reveal something remarkable: Nubank now serves 118.6 million customers, generates $13 billion in annualized revenue, and posts profits that dwarf every competitor globally.

The numbers are staggering enough to make any Silicon Valley founder weep. Nubank's quarterly profit of $557 million is 44 times larger than Chime's entire $12.7 million quarterly profit—despite Chime finally achieving profitability after a decade of losses. Nubank generates more revenue than Revolut and Chime combined, while maintaining an efficiency ratio of 24.7% that puts traditional banks to shame.

The uncomfortable truth? The biggest neobank success story isn’t happening where everyone's looking.

When the Data Destroys the Narrative

Nubank vs. WeBank: Quality Over Quantity

WeBank serves an impressive 400 million customers—more than triple Nubank's base. But here's where Nubank's brilliance shows: Nubank generates $110 revenue per customer annually while WeBank manages just $10.50. This isn't just a difference in markets—it's a masterclass in business model selection.

While WeBank focused on financial inclusion through micro-lending to China's underbanked masses, Nubank chose the credit card route in Brazil's high-interest environment. The result? Nubank produces 3x more revenue and 70% more profit despite serving one-third the customers. WeBank built impressive scale; Nubank built a money-printing machine.

Nubank vs. Revolut: Simplicity Beats Complexity

Revolut wins on features—crypto trading, travel insurance, business banking, investment products. It's a financial super app with over 50 million customers across multiple continents. Yet Nubank generates 3.25x more revenue while serving just 2.3x more customers.

The secret? Nubank's laser focus on credit products. While Revolut diversified into lower-margin services, Nubank mastered what actually drives banking profitability: interest income from credit cards and personal loans. 84% of Nubank's revenue comes from interest income, creating predictable, high-margin cash flows that Revolut's diversified model can't match.

Nubank's efficiency ratio of 24.7% means just 25 cents of every revenue dollar goes to operating costs. Revolut doesn't disclose this metric, but their need to maintain operations across dozens of countries with hundreds of different products suggests significantly higher operational complexity and costs.

Nubank vs. Chime: David and Goliath Reversed

This comparison is almost unfair. Nubank's quarterly profit of $557 million exceeds Chime's entire annual profit by more than 10x. Chime spent a decade burning cash in America's competitive banking market before achieving razor-thin quarterly profits of $12.7 million on $519 million in revenue—a 2.4% profit margin that's frankly embarrassing for a "tech company."

Nubank achieves a 17% profit margin while serving 14x more customers. The contrast highlights what happens when you choose the right market at the right time versus fighting over scraps in a saturated market. Chime's customer acquisition costs historically exceeded $100 per user; Nubank's remain around $5-7 while serving a much larger population.

The Brazilian Advantage That Changes Everything

These competitive advantages didn't happen by accident. Nubank entered a market where traditional banks were charging some of the world's highest fees while leaving 30% of adults completely unbanked. Interest rates in the 15-20% range created massive margins for those who could master credit underwriting. Less competition meant easier customer acquisition and higher retention.

Compare this to Chime's challenge: entering a market where traditional banks like Chase already offer competitive digital experiences, where regulatory restrictions limit fee income, and where customers already have established banking relationships. Nubank found a greenfield; Chime entered a war zone.

Even WeBank, despite its impressive technical capabilities, operates in a fundamentally different model. China's focus on financial inclusion means serving customers with limited ability to pay, requiring massive scale to achieve profitability. Nubank serves middle-class Brazilians with higher purchasing power and credit needs, generating superior unit economics from day one.

The Strategic Masterstroke: Buying Into Africa

In December 2024, Nubank executed what may prove to be the most strategically brilliant move in fintech history. Rather than burning billions trying to crack new markets like so many failed expansions, Nubank led a $250 million investment in TymeBank, securing a 10% stake in Africa's fastest-growing digital bank at a $1.5 billion valuation.

This move demonstrates strategic thinking that competitors like Revolut completely miss. Instead of expensive direct expansion, Nubank gains exposure to Africa's massive growth potential through a proven local champion. TymeBank mirrors Nubank's trajectory: serving underbanked populations, achieving rapid scale, and reaching profitability in just four years.

The knowledge transfer potential is extraordinary. As Nubank founder David Vélez explained: "We are excited to work with Tyme to share many of our learnings of scaling this model to hundreds of millions of customers." Nubank's operational expertise could accelerate TymeBank's growth while providing geographic diversification without execution risk.

TymeBank has stated its target to IPO in New York by 2028, potentially generating significant returns on Nubank's investment while validating this partnership approach for future expansion. If successful, Nubank could replicate this strategy across other high-growth markets, building a portfolio of regional champions rather than attempting costly direct expansion.

Why the Market Still Doesn't Get It

Despite crushing every competitor in revenue, profit, and efficiency, Nubank trades at just 4.5x revenue while Revolut commands an 11.25x multiple. This valuation gap reflects persistent bias toward Western companies despite inferior financial performance.

The market continues to price in Revolut's "global expansion potential" while ignoring that Nubank already serves more customers than Revolut across three countries and generates superior returns. Meanwhile, Chime's recent IPO filing at a $25 billion valuation—despite barely achieving profitability—shows how disconnected valuations remain from actual business performance.

Nubank's Q1 2025 results should be a wake-up call: $3.25 billion in quarterly revenue, $557 million in quarterly profit, 118.6 million customers, and a 24.7% efficiency ratio. These aren't the metrics of a regional player—they're the numbers of the world's most successful neobank, period.

The Future Belongs to Nubank

As Nubank approaches $13 billion in annual revenue with $2.2 billion in profit, while competitors struggle with razor-thin margins or continued losses, the competitive landscape becomes clear. Nubank didn't just build a successful neobank—it built the template for how digital banking should work.

The TymeBank investment signals that Nubank isn't content with regional dominance. By partnering with proven champions in other high-growth markets, Nubank is building a global emerging markets fintech coalition while competitors fight over saturated Western markets.

For investors, operators, and observers who missed Nubank's rise while focusing on London and San Francisco, the implications are sobering. The world's most successful neobank has been hiding in plain sight in São Paulo, generating returns that make every Western competitor look like a rounding error.

The purple giant from Brazil didn't just build a bank—it proved that choosing the right market matters more than having the most features, the biggest marketing budget, or the most prestigious investors. Sometimes the best strategy is simply being where your competitors aren't looking.

Disclaimer: This analysis is for informational purposes only and does not constitute financial or investment advice. Always conduct your own research and consult with qualified financial professionals before making investment decisions.

Sources

Primary Financial Data:

• Nu Holdings Ltd. Q1 2025 Financial Results and SEC Filings

• Chime Financial Inc. Form S-1 Registration Statement, SEC Filing (May 2025)

• WeBank Co. Ltd. Annual Reports and The Asian Banker Awards Data (2022-2025)

• TymeBank Series D Funding Announcements (December 2024)

• Revolut Ltd. 2024 Annual Report

Industry Analysis and Market Data:

• The Asian Banker Excellence in Retail Financial Services Awards 2025

• Reuters: "Brazilian digital lender Nubank invests $150 million in Tyme Group" (December 17, 2024)

• TechCrunch: "African digital bank Tyme raises $250M round led by Nubank at $1.5B valuation" (December 19, 2024)

• Endeavor: “Nubank Leads Tyme’s $250M Series D. Here’s the Story.” (December 18, 2024)

• PYMNTS: "Chime Sets Sights on the Affluent Consumer and an $86 Billion Revenue Opportunity" (May 2025)

• McKinsey: "WeBank makes financial services available to the masses through AI" (August 2022)

• Mordor Intelligence: Asia-Pacific Neo Banking Market Analysis (2025)

• Fintech Singapore: "There Are Only 11 Profitable Challenger Banks In Asia" (March 2024)

Regulatory and Corporate Filings:

• U.S. Securities and Exchange Commission (SEC) EDGAR Database

• Singapore Exchange (SGX) and Hong Kong Stock Exchange filings

• Central Bank of Brazil regulatory reports

• Various company investor relations materials and press releases

In Latin America, WhatsApp has transcended its role as a messaging app to become the de facto operating system for a new wave of fintech innovation. With nearly universal adoption across the region—Brazil alone has 120 million users, making it WhatsApp's second-largest market globally—the platform provides an unparalleled foundation for financial services that traditional banking infrastructure has failed to deliver.

WhatsApp isn't merely another channel; it's becoming the primary interface through which millions of Latin Americans access, manage, and transact with financial services. This article explores how WhatsApp has emerged as the "OS" for Latin American fintech, the verticals being transformed, and what the future holds for this powerful convergence of messaging and finance.

The Perfect Storm: Why WhatsApp Dominates in Latin America

WhatsApp's dominance in Latin America stems from a combination of regional factors that created the perfect conditions for it to become the foundation for financial innovation:

Unprecedented User Penetration: WhatsApp usage in Latin America ranges from 80-90% of the population across major markets. In Brazil, 90% of the population uses WhatsApp daily, while in Mexico and Colombia, similar high penetration rates make it the digital common denominator across all demographics from urban millennials to rural elderly users.

Mobile-First Population: Latin America experienced a technological leapfrog, with many consumers bypassing desktop computing and moving directly to smartphones. In the last six years, smartphone usage in Mexico increased from 35% to over 50%, while internet penetration grew from below 50% to 70%. This mobile-first ecosystem aligned perfectly with WhatsApp's strengths.

Trust and Familiarity: A Mexican study found that 80% of users prefer communicating with businesses through WhatsApp due to its speed of response and inherent trust. This stands in stark contrast to the often low trust in traditional financial institutions across the region, particularly among unbanked populations.

Network Effect and Zero-Rating: Many mobile carriers in the region offer zero-rated WhatsApp data usage, meaning users can use the app without incurring data charges. This has further cemented WhatsApp as a daily utility across all socioeconomic segments.

Banking Gap: With approximately 26% of Latin Americans (122 million people) still unbanked as of 2021 according to World Bank data, there's enormous untapped potential for financial services that can reach this population through channels they already use.

WhatsApp as the Fintech OS: How It Works

Referring to WhatsApp as an "operating system" for fintech is metaphorical but increasingly accurate. The platform provides a unified environment where users can access a variety of financial services through a familiar interface, much like an OS provides a foundation for applications.

Fintech companies are building full-fledged services within WhatsApp—using the WhatsApp Business API, chatbots, and conversational user experiences—rather than developing standalone mobile apps or websites. This strategy transforms the chat thread into the primary user interface for banking, payments, lending, and more.

This OS-like functionality manifests in several ways:

1. Interface Layer: WhatsApp provides a consistent user interface with which nearly all Latin Americans are already familiar, eliminating the learning curve that comes with new financial apps.

2. Identity and Authentication: Phone numbers serve as user identifiers, with WhatsApp's verification serving as a first authentication layer.

3. Communication Backbone: The platform handles notifications, alerts, and real-time messaging, enabling both automated and human support.

4. Rich Media and Interactive Elements: Financial institutions can leverage WhatsApp's support for images, documents, voice notes, links, and interactive buttons to create sophisticated user experiences.

5. Distribution Channel: Rather than competing for downloads in crowded app stores, fintech services exist in users' WhatsApp contact lists, where they receive high visibility and engagement.

6. System of Record: WhatsApp conversations provide a permanent, chronological record of all financial interactions. This serves as a built-in transaction ledger that users can reference for proof of payments, loan terms, or account activities. The chat history effectively becomes a system of record that both customers and financial institutions can access, creating transparency and accountability without additional infrastructure.

Let's examine how this OS-like functionality is transforming key fintech verticals across Latin America.

Payments: The Leading Edge

The payments vertical has seen the most significant WhatsApp-driven innovation, particularly in Brazil with its instant payment system Pix:

Magie (Brazil): This AI-powered financial assistant enables users to send money and pay bills through WhatsApp. Users connect their bank accounts to Magie's service and can initiate transfers or payments by simply texting the WhatsApp bot using natural language or voice commands. Their tagline—"Use all your banks on WhatsApp"—encapsulates how the platform serves as a universal financial interface. Magie has processed over R$100 million (~$16.5M USD) in transfers via WhatsApp, demonstrating the viability of chat-based payment services.

Félix Pago (Mexico): Focused on cross-border remittances, Félix Pago built a WhatsApp-based chatbot allowing Latino workers in the US to send money home through simple message exchanges. Users can even use voice messages to instruct the bot whom to send money to and how much. This approach was so successful that Félix Pago raised a $15.5M Series A to expand, and even Nubank in Mexico partnered with them to power remittances for its 5.5 million users through WhatsApp.

WhatsApp Pay (Brazil): Meta's own payment solution has gained significant traction after regulatory approval. Telecom operator Claro now receives over 500,000 customer bill payments monthly through WhatsApp Pay via Pix. According to Claro's tech director, this channel has "generated a lot of efficiency and reduced costs," with customer satisfaction rates at 80% positive.

Merchant Payments: Beyond P2P transfers, startups are enabling in-chat payments to businesses. Many payment providers allow merchants to generate payment links sent via WhatsApp, bringing the checkout experience directly into the chat thread. This is proving particularly effective for small businesses operating in the informal economy.

Banking: The Full-Service Hub

Beyond payments, WhatsApp is becoming a comprehensive banking channel:

Tpaga (Colombia): This fintech offers "WhatsApp Banking" that allows users to perform many bank-like functions through chat. A user can text "Hi" to Tpaga's WhatsApp line, go through registration, and instantly have a digital account created. From that same chat, they can request to pay utility bills, top up mobile credit, and make purchases. Tpaga's CEO highlights that banks can save approximately 25% in customer service costs by handling interactions through WhatsApp.

Truora (Colombia): This startup became an official WhatsApp Business Solution Provider and offers a product helping banks and fintechs onboard and service users via WhatsApp. Their solution integrates identity verification, digital signatures, and customer support into a WhatsApp chat flow. During a pilot, users could initiate account opening by messaging a bank's WhatsApp line, with the chatbot requesting a selfie and ID photo for verification.

Technical Advantages of the WhatsApp-First Approach

Several factors make WhatsApp particularly effective as a fintech platform in Latin America:

Zero Installation Friction: By eliminating the need to download and install apps, WhatsApp removes a major adoption barrier. This is especially critical in markets where phone storage is limited or app store literacy is low.

Familiar, Low-Learning-Curve UI: The chat interface is one that users across all demographics already understand. There's virtually no learning curve—if you can send a text or voice note, you can use a WhatsApp-based financial service.

Asynchronous Convenience: WhatsApp allows users to engage at their own pace. A customer can start a process, pause to gather documents, and resume by simply continuing the chat—without losing progress.

High Engagement and Open Rates: WhatsApp messages have significantly higher open and response rates compared to emails or push notifications. According to Mozper, prospects engaging via WhatsApp were twice as likely to convert compared to other channels.

Personalized, Two-Way Communication: The conversational nature of WhatsApp enables personalized interactions. Bots can ask questions to tailor recommendations, and conversations can be escalated to human agents when needed—all within the same chat thread.

Rich Media and Interactive Elements: WhatsApp supports images, documents, voice notes, links, and interactive buttons, enabling sophisticated financial experiences without leaving the app.

The Future of WhatsApp as a Fintech Operating System

Looking ahead, several trends will shape WhatsApp's evolution as Latin America's fintech OS:

1. Deeper Integration with Regional Payment Systems

As instant payment infrastructures like Pix in Brazil and CoDi in Mexico mature, we can expect tighter integration with WhatsApp. The success of WhatsApp Pay in Brazil demonstrates the potential of these integrations. As similar payment systems emerge across the region, WhatsApp will likely become the primary interface through which users interact with national payment infrastructures.

2. Conversational AI Advancements

AI capabilities are rapidly improving the sophistication of WhatsApp-based financial assistants. We're already seeing this with services like Magie processing voice commands for transactions. Future iterations will handle increasingly complex financial tasks through natural conversation, from personalized investment advice to automated expense categorization and financial planning.

3. Cross-Vertical Integration

As the WhatsApp fintech ecosystem matures, we'll see greater integration across verticals. For example, a user might receive a loan through a lending service on WhatsApp, then automatically receive insurance offers for the purchased asset, followed by investment opportunities once the loan is repaid—all coordinated through different fintech providers but experienced as a seamless journey within WhatsApp.

4. Expansion Beyond Consumer Finance

While most current examples focus on consumer applications, WhatsApp is increasingly being adapted for SME financial services. Business owners in Latin America already use WhatsApp extensively for customer communications, making it a natural channel for business banking, merchant services, inventory financing, and other B2B financial products.

5. Regulatory Framework Evolution

Regulatory bodies across Latin America are adapting to this new paradigm. Brazil approved its Open Banking project in 2019, and other countries like Mexico have established frameworks for fintech companies to compete with traditional financial institutions. As regulations evolve to address WhatsApp-based services specifically, we'll see accelerated innovation and adoption.

6. Financial Infrastructure as a Service

Companies like Truora are already providing infrastructure that allows any financial institution to deliver services via WhatsApp. This "WhatsApp Banking-as-a-Service" trend will accelerate, enabling even traditional banks to quickly deploy sophisticated WhatsApp capabilities without extensive technical development.

7. Greater Consolidation of Financial Services

WhatsApp will increasingly serve as a financial super-app, where users can access diverse services from different providers through a unified interface. Rather than switching between apps, users will navigate between different WhatsApp business accounts for various financial needs, with each account effectively functioning as an "app" within the WhatsApp ecosystem.

Conclusion

WhatsApp's emergence as the operating system for Latin American fintech represents a fundamental shift in how financial services are conceived, delivered, and experienced in the region. By leveraging WhatsApp's ubiquity, trust, and familiarity, fintech startups are overcoming traditional barriers to financial inclusion and creating services that meet users where they already are.

The most successful fintech startups in Latin America today aren't asking users to download yet another app—they're building sophisticated financial experiences within the messaging platform that has already become part of users' daily lives. This approach is proving particularly effective in reaching the previously unbanked, driving Latin America's dramatic increase in financial inclusion from 55% in 2017 to 74% in 2021.

The strategic implications are clear: in Latin America, a WhatsApp strategy isn't optional—it's essential. Those who master the art of delivering financial services through this conversational medium will have a significant advantage in customer acquisition, engagement, and retention.

The future belongs to companies that can transform a simple chat thread into a comprehensive, compliant, and secure financial platform—turning WhatsApp from a messaging app into the true operating system of Latin American finance.

Sources

1. Andreessen Horowitz. "Latin America's Fintech Boom." A16Z. Brazil's statistics on WhatsApp usage (120 million users) and digital transformation in Latin America. https://a16z.com/latin-americas-fintech-boom/

2. Fintech Nexus. "Fintechs in Latin America Draw Venture Capital Interest, Again." Analysis of fintech investment trends in Latin America. https://www.fintechnexus.com/vc-latin-america-fintechs/

3. LatamList. "Five Reasons to Invest in Latin American Fintech." Overview of the Latin American fintech ecosystem and investment opportunities. https://latamlist.com/five-reasons-to-invest-in-latin-american-fintech/

4. TechCrunch. "All that fintech investment had a real impact on banking penetration in Latin America." Data on financial inclusion growth in Latin America. https://techcrunch.com/2023/09/01/latam-fintech-banking-penetration/

5. Inter-American Development Bank (IDB). "Study: Fintech Ecosystem in Latin America and the Caribbean Exceeds 3,000 Startups." Comprehensive study on the fintech ecosystem growth in Latin America. https://www.iadb.org/en/news/study-fintech-ecosystem-latin-america-and-caribbean-exceeds-3000-startups

6. FF News. "Best Insurance Launches WhatsApp Apply and Buy Service." Case study on insurance services via WhatsApp. https://ffnews.com/newsarticle/insurtech/best-insurance-launches-whatsapp-apply-and-buy-service/

7. FinTech Global. "An era of Latin American InsurTech growth." Overview of insurtech developments in Latin America. https://member.fintech.global/2022/03/21/an-era-of-latin-american-insurtech-growth/

8. The Digital Insurer. "Overview of the Insurtech Ecosystem in Latin America." Analysis of insurtech trends and regulatory environments in Latin America. https://www.the-digital-insurer.com/overview-of-the-insurtech-ecosystem-in-latin-america/

9. DashCX. "Exploring the possibilities of a WhatsApp API for banking and fintech." Technical overview of WhatsApp Business API applications in financial services. https://www.dashcx.com/blogs/exploring-the-possibilities-of-a-whatsapp-api-for-banking-and-fintech-dashcx/

10. BBVA Spark. "Financial inclusion in Latin America." Data on financial inclusion and the role of digital technologies. https://www.bbvaspark.com/contenido/en/news/fintech-entrepreneurship-to-drive-financial-inclusion-in-latin-america/

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14. WebenGage. "10 Strategic Fintech WhatsApp Use Cases for Better Outreach." Examples of WhatsApp applications in financial services. https://webengage.com/blog/whatsapp-use-cases-for-fintech/

15. Forbes. “Whatsapp toma fuerza como escenario para pagos y servicios financieros en Colombia”. Examples of banking applications in Colombia. https://forbes.co/2024/02/28/tecnologia/productos-financieros-en-whatsapp

Henrique Weaver is the co-founder and CEO of Pagaleve, a Brazilian fintech pioneering buy now, pay later services via Brazil's instant payment system PIX. Before founding Pagaleve, Henrique held leadership positions at global companies including Uber, OYO, and McKinsey. He recently led Pagaleve to reach over 1 billion reais in payment volume and achieve positive EBITDA while growing 8x year-over-year. In this episode, we discuss how Pagaleve is revolutionizing credit access in Brazil, the impact of payment innovation on financial inclusion, and the future of fintech in emerging markets.

In this conversation, you'll learn:

• How Pagaleve serves three underserved customer groups: people without credit cards, those with insufficient credit limits, and consumers who prefer alternative payment methods

• Why Pagaleve's purchasing process is faster and simpler than using a credit card online

• How PIX, Brazil's instant payment system, has created new opportunities for fintech innovation

• The cultural lessons Henrique brought from Uber's "big bold bets" philosophy to Pagaleve

• How Pagaleve's AI-driven credit engine analyzes 100+ variables in real-time to achieve 70% approval rates with delinquency below 2%

• The three key traits Henrique looks for when hiring: high energy levels, interpersonal skills, and strong analytical capabilities

• How Pagaleve is testing physical retail with 2,000 locations while maintaining focus on e-commerce

• The strategy behind securing a $25M Series A led by Salesforce Ventures (their first investment in Latin America)

• How Pagaleve achieved positive EBITDA while maintaining 8x year-over-year growth

• Practical advice for entrepreneurs building fintech solutions in emerging markets

Some takeaways:

1. The Brazilian market has a deeply embedded installment payment culture, but before Pagaleve, credit cards were the only scalable payment option, excluding three key customer segments: people without credit cards (30% of adults), consumers with insufficient credit limits, and those who prefer alternative payment methods.

2. Building a successful fintech in emerging markets requires understanding local payment culture—Brazilian consumers expect installment options for most purchases, making Pagaleve's offering a natural fit despite the presence of established players.

3. Real-time data and AI-driven credit assessment can dramatically improve approval rates compared to traditional methods—Pagaleve achieves 70% approval rates while traditional "crediários" only approve 15-20% of requests.

4. For founders recruiting top talent to startups, focus on communicating your vision for the future rather than current company size—Henrique successfully recruited executives from established companies by showcasing the long-term opportunity.

5. Company culture should be established early and centered around clear, actionable values—Pagaleve's five cultural norms include collaboration, authenticity, high energy, thinking big, and taking responsibility for the whole business.

6. When pursuing enterprise clients, prioritize delivering measurable value over marketing tactics—retailers adopt Pagaleve because they generate more revenue, not because of promotional efforts.

7. Innovative features that solve specific friction points can drive growth—co-payment for partial approvals and turbo approval for initially declined customers have significantly improved conversion rates for Pagaleve's merchant partners.

8. Prioritize ruthlessly instead of spreading resources too thin—despite having domain names for expansion across Latin America, Pagaleve remains focused exclusively on Brazil where the opportunity is large enough to build a multi-billion dollar company.

9. Balance process creation with maintaining agility as your company grows—Pagaleve implemented structured planning forums while being careful not to lose the speed and flexibility of a smaller operation.

10. For entrepreneurs building fintech solutions in emerging markets, invest significant time researching local regulations, talk to domain experts rather than just reading articles, and be conservative in regulatory compliance to avoid unexpected setbacks.

Where to find Henrique Weaver:

• LinkedIn: https://www.linkedin.com/in/henriqueweaver/

Where to find Pagaleve:

• Website: https://www.pagaleve.com.br

• LinkedIn: https://www.linkedin.com/company/pagaleve

In this episode, we cover:

(00:00) Introduction to Emerging Fintech

(03:23) Henrique Weaver's Journey to Fintech Entrepreneurship

(07:05) Lessons from Uber and OYO: Building a Strong Foundation

(11:35) Understanding Brazil's Unique Payment Culture and Initial Hypothesis about Pagaleve

(15:05) Validating the Pagaleve Hypothesis: Research and Insights

(16:47) Building a Diverse and Talented Founding Team in Pagaleve

(19:23) Cultural Values at Pagaleve: The Foundation of Success

(21:19) The Initial Pitch of Pagaleve: Convincing Investors and Employees

(24:27) Differentiating Pagaleve: Competitive Advantages in the Market

(26:34) Pagaleve's Innovative Risk Assessment: Understanding Consumer Behavior

(32:19) Leveraging AI: Enhancing Pagaleve's Decision-Making Process

(33:54) Securing Investment: Pagaleve's Series A Journey

(36:21) Understanding Pagaleve's Product-Market Fit

(37:23) Evolving Pagaleve's Product Strategy Through Feedback

(38:32) Pagaleve's Innovative Features and Their Impact

(41:22) Pagaleve's Scaling Success: From 30 to 7,000 Merchants

(43:01) Pagaleve's Customer Stories and Competitive Edge

(44:09) Pagaleve's Inflection Points in Growth

(45:11) Pagaleve's Challenges of Expanding to Physical Stores

(49:46) Navigating Crisis as a Leader

(52:36) The Buy Now Pay Later Landscape

(53:57) Remarkable Growth and Future Expectations

(56:03) Vision for the Future of Pagaleve

(57:00) Challenges in Execution and Prioritization

(58:13) Potential for Expansion Beyond Brazil

(59:31) Predictions for Financial Services in Emerging Markets

(01:00:21) Best Piece of Advice Received

(01:01:33) Advice on Hiring A Players for Your Startup

(01:03:49) Rapid-Fire Questions and Personal Insights

(01:07:49) Closing Thoughts and Reflections

In 2020, Andreessen Horowitz's general partner Angela Strange boldly predicted that "every company will be a fintech company." In her seminal article, Strange argued that financial services infrastructure was becoming available "as a service," similar to how Amazon Web Services transformed computing infrastructure. This democratization would enable companies outside the traditional financial sector to integrate powerful financial services into their core offerings.

Four years later, the Latin American market has become a powerful validator of Strange's thesis, with companies across various sectors strategically adding fintech components to significantly boost their valuations. The results have been nothing short of remarkable, especially in a region where banking penetration has historically lagged behind global averages.

The Latin American Fintech Value Multiplier Effect

For non-financial companies in Latin America, embedding financial services into their core business models isn't merely about creating an incremental revenue stream—it's increasingly becoming a valuation multiplier. By examining the region's most successful examples, a clear pattern emerges of how fintech components are creating outsized returns on investment.

Mercado Libre/Mercado Pago: The Ultimate Fintech Transformation Story

Mercado Libre began in 1999 as Latin America's answer to eBay, but its fintech arm Mercado Pago (launched in 2003) has fundamentally transformed the company's growth trajectory and valuation profile. In Q4 2024, Mercado Libre reported:

• Total revenue: $6.1 billion, with fintech revenue accounting for $2.5 billion (41% of total)

• Marketplace GMV: $14.5 billion

• Fintech TPV (Total Payment Volume): $59 billion for the quarter, $197 billion for full-year 2024

• Fintech monthly active users: 61 million (34% YoY growth)

• Credit portfolio: $6.6 billion (74% YoY growth)

• Assets under management: $10.6 billion (129% YoY growth)

The remarkable aspect of Mercado Libre's story isn't just the size of its fintech business but how it enhances the core e-commerce operation. The flywheel effect is evident: financial services increase user engagement and retention, while the marketplace provides a natural customer acquisition channel for fintech products.

Based on industry EV/LTM Revenue Multiples for different fintech sectors (Payment: 3.38x, Banking: 2.48x, Lending: 4.43x), we can make a more accurate calculation of fintech contribution to Mercado Libre's overall valuation:

• Mercado Libre's total 2024 net revenue: $21 billion

• Fintech revenue (41% of total): $8.61 billion

• Mercado Libre operates both payment solutions and lending, requiring a blended multiple:

  • Payment operations (estimated 60% of fintech revenue): $5.17 billion × 3.38x = $17.47 billion

  • Lending operations (estimated 40% of fintech revenue): $3.44 billion × 4.43x = $15.24 billion

  • Combined contribution to market cap: $32.71 billion

• MercadoLibre's current market cap: $98 billion

This means MercadoPago likely contributes approximately 33.4% to MercadoLibre's total market capitalization, despite generating 41% of revenue. While this is lower than the e-commerce component's contribution, it reflects the significant value that fintech operations add to MercadoLibre's business model.

Rappi/RappiPay: From Delivery App to Financial Powerhouse

Rappi, initially a Colombian on-demand delivery startup founded in 2015, recognized early the potential of embedding financial services. In March 2019, Rappi partnered with Visa to launch RappiPay, a digital wallet and prepaid card service in collaboration with Banco Davivienda in Colombia. By 2022, RappiPay Colombia obtained approval to operate as a fully digital bank.

• Rappi's total valuation: $5.25 billion (as of latest funding round)

• For 40% of RappiPay credit card holders, it was their first credit card ever

• RappiPay had over 800,000 account holders and issued more than 220,000 credit cards by 2022

Using the appropriate Banking EV/LTM Revenue Multiple of 2.48x for neobanks (as shown in the industry data), we can estimate RappiPay's contribution to Rappi's overall valuation:

• Estimated RappiPay annual revenue: $175-200 million (based on industry reports)

• Applying a 2.48x revenue multiple: $434-496 million contribution to valuation

• Against Rappi's $5.25 billion valuation: approximately 8.3-9.4% contribution

This valuation contribution, while lower than using broader fintech multiples, still represents a significant value-add to Rappi's core delivery business, particularly considering RappiPay is a relatively new addition to the company's ecosystem.

iFood/iFood Pago: Brazil's Delivery Giant Becomes a Digital Bank

iFood, Brazil's dominant food delivery platform (processing over 100 million orders monthly), has also made a strategic move into financial services with iFood Pago, its digital bank designed specifically for restaurant partners.

Launched in early 2024, iFood Pago has already achieved remarkable success:

• 140,000 active digital accounts within months of launch

• Processing R$70 billion (~$12.5 billion) annually in transactions

• Provided over R$1.5 billion (~$270 million) in credit to restaurant entrepreneurs

According to Bruno Henriques, CEO of iFood Pago,

"Restaurants that used Maquinona [from iFood Pago] increased sales by 7%, and entrepreneurs who received credit from iFood grew 20% more than those who did not receive it."

What makes iFood's fintech play unique is its deep understanding of restaurant operations and economics. As Henriques notes,

"The big difference is that banks can't know who the restaurant owner is. We do. We have an established relationship of trust and we know that their business is performing well, because we monitor the behavior and performance of this restaurant on iFood."

Applying the industry EV/LTM Revenue Multiples for iFood Pago, which combines both payment processing (3.38x) and some lending activities (4.43x), we can estimate a blended multiple approach:

• Estimated iFood Pago annual revenue: $90-110 million (based on transaction volume and industry standards)

• Estimated revenue mix: 80% payments (3.38x) / 20% lending (4.43x) = blended multiple of 3.59x

• Applying a 3.59x revenue multiple: $323-395 million contribution to valuation

• Based on iFood's estimated valuation of $5-7 billion: approximately 5.6-7.9% contribution

This is a significant early contribution from a financial services unit launched just in 2024, demonstrating the potential for iFood Pago to become an increasingly important value driver as it scales its operations.

Kavak/Kuna Capital: From Car Marketplace to Full-Fledged Fintech

Kavak, Mexico's online used-car marketplace founded in 2016, has strategically evolved its fintech arm from an in-house financing service to a standalone fintech brand. Initially launched as Kavak Capital around 2020-2021, the company rebranded and spun out its lending unit in late 2023 as "Kuna Capital" while remaining under Kavak's umbrella.

The transformation has been impressive:

• Kuna has approved over 60,000 auto loans as of 2024

• 40% of their borrowers are first-time car buyers who were underserved by traditional lenders

• The platform achieves an 85% approval rate—significantly higher than traditional banks

• Kuna now offers financing not just for Kavak's inventory but for new and used vehicles across 600+ dealerships in Mexico

Using the specific Lending EV/LTM Revenue Multiple of 4.43x (as shown in the industry data), we can calculate Kuna's contribution to Kavak's valuation:

• Estimated Kuna annual revenue: $320-350 million (based on loan volume and industry reports)

• Applying a 4.43x revenue multiple: $1.42-1.55 billion contribution to valuation

• Against Kavak's $8.7 billion valuation: approximately 16.3-17.8% contribution

While this represents a smaller percentage than broader fintech multiples might suggest, it still indicates that Kavak's financing arm contributes significantly to the company's overall valuation, highlighting the strategic importance of embedded financial services to its business model.

Habi: Colombia's PropTech Unicorn with Embedded Mortgage Solutions

Habi, a Colombian proptech founded in 2019 that reached unicorn status in 2022 with a $1+ billion valuation, has also integrated financial services into its real estate platform. Habi's core business is buying, renovating, and selling residential properties, but the company has strategically incorporated mortgage and financing solutions to make home ownership more accessible.

The company helps homebuyers:

• Secure down payments by providing up to 20% of the property value

• Access mortgage financing through partnerships with financial institutions

• Unlock home equity through loans against existing property value

With its proprietary pricing algorithm "Habimetro" providing accurate property valuations and a centralized database for document management, Habi has created a data advantage that enables better risk assessment for real estate financing.

Applying the Lending EV/LTM Revenue Multiple of 4.43x to Habi's fintech operations:

• Estimated mortgage/financing revenue: $35-45 million (based on industry benchmarks)

• Applying a 4.43x revenue multiple: $155-199 million contribution to valuation

• Against Habi's $1+ billion valuation: approximately 15.5-19.9% contribution

This significant portion of Habi's valuation attributed to its financing operations demonstrates how embedding financial services can transform the economics of a vertical marketplace, even when using more conservative industry-specific multiples.

Why Fintech Components Command Premium Valuations

Several factors explain why adding fintech components typically increases a company's overall valuation multiple:

1. Higher margins and recurring revenue: Financial services generally offer higher margins than e-commerce, retail, or logistics. MercadoPago's credit card portfolio alone grew 118% YoY, creating a recurring revenue stream with attractive economics.

2. Reduced customer acquisition costs: Companies leverage their existing user base, significantly lowering customer acquisition costs compared to standalone fintech startups. This is especially valuable in Latin America, where customer acquisition costs can be prohibitively high for pure-play fintechs.

3. Enhanced customer retention and lifetime value: Financial services create stronger user lock-in. For example, MercadoLibre reports that users engaging with both marketplace and fintech products demonstrate significantly higher retention rates and spending.

4. Data advantage: Transaction data from the core business provides valuable insights for financial services, enabling better risk assessment and personalization. This proprietary data creates a significant competitive advantage over traditional financial institutions.

5. Cross-selling opportunities: Each product strengthens the ecosystem. For example, MercadoLibre's credit offerings increase marketplace spending, while the marketplace drives customer acquisition for fintech products.

The Value Calculation: Quantifying the “Fintech Premium”

To quantify how much value fintech components add to Latin American companies, we can examine several key metrics:

For public companies like MercadoLibre, we can observe that the fintech segment (MercadoPago) generates approximately 41% of total revenue but contributes about 33.4% to the company's overall market capitalization. While this is lower than the e-commerce contribution, it still demonstrates the significant value that financial services add to the core business.

For private companies like Rappi, we can analyze how valuations changed after introducing financial services. Rappi's valuation increased from about $2 billion before RappiPay to $5.25 billion after its fintech expansion, despite the challenging funding environment during this period.

A framework for estimating this "fintech premium" can be expressed as:

Fintech Value Contribution = Annual Fintech Revenue × Fintech Sector Multiple

Where:

• Annual Fintech Revenue is the revenue generated by financial services

• Fintech Sector Multiple is the specific valuation multiple for that type of financial service (Payment: 3.38x, Banking: 2.48x, Lending: 4.43x, or a blended rate for hybrid operations)

For example, if a company generates $500 million in annual lending revenue, the fintech component would contribute $2.22 billion to the company's overall valuation:

Fintech Value Contribution = $500M × 4.43 = $2.22B

Case Studies: How Different Business Types Leverage Fintech

E-commerce Companies

MercadoLibre (Brazil/Regional)

• Financial services: Payments processing, consumer credit, merchant financing, digital banking

• Value creation: Higher transaction volume, increased marketplace GMV, reduced cart abandonment, higher customer lifetime value

• Valuation impact: MercadoPago contributes approximately 33.4% to MercadoLibre's market cap while generating 41% of revenue

Food Delivery Platforms

Rappi (Colombia) and iFood (Brazil)

• Financial services: Digital wallets, restaurant financing, co-branded credit cards, payment processing

• Value creation: Increased merchant loyalty, higher order frequency, new revenue streams

• Valuation impact: Financial services contribute 8.3-9.4% to Rappi's valuation and 5.6-7.9% to iFood's valuation, with both expected to grow as their fintech operations mature

Vertical Marketplaces

Kavak (Mexico - Used cars) and Habi (Colombia - Real estate)

• Financial services: Auto loans, mortgage financing, vehicle/property insurance

• Value creation: Higher transaction values, improved conversion rates, recurring revenue from loan interest

• Valuation impact: Kuna contributes 16.3-17.8% to Kavak's $8.7 billion valuation, while Habi's financing components account for approximately 15.5-19.9% of its $1+ billion valuation

Building a Successful Fintech Component Strategy

Based on Latin America's success stories, companies looking to leverage fintech to increase their valuation should consider these strategic imperatives:

1. Start with payments: Like MercadoPago, begin by solving payment friction in your core business before expanding to more complex financial services.

2. Target underserved segments: Focus on customer segments overlooked by traditional banks. For example, 40% of RappiPay credit card users received their first-ever card through the service.

3. Leverage unique data: Use proprietary data from your core business to develop superior risk models and personalized financial products. MercadoLibre's credit underwriting leverages 20+ years of marketplace transaction data.

4. Create seamless integration: Ensure financial services enhance rather than distract from the core customer experience. The most successful implementations feel like natural extensions of the main product.

5. Invest in independent financial infrastructure: Build dedicated fintech capabilities rather than simply reselling other providers' services. Kavak's evolution from Kavak Capital to the standalone Kuna brand illustrates this approach.

Challenges and Considerations

While the fintech premium is compelling, companies should be aware of several challenges:

1. Regulatory complexity: Financial services are heavily regulated, requiring specialized knowledge and compliance systems. MercadoLibre has had to navigate different regulatory frameworks across multiple countries.

2. Capital requirements: Lending and other financial services require significant capital. Companies must be prepared to allocate substantial resources or secure external funding like Kavak did with its financing facilities.

3. Risk management expertise: Financial services introduce new types of risk, particularly credit risk. Building strong risk management capabilities is essential.

4. Technology infrastructure: Robust, secure systems are necessary for handling financial data and transactions. This often requires significant technology investment.

Conclusion: The Future of Embedded Finance in Latin America

The Latin American experience confirms Angela Strange's prediction that "every company will be a fintech company." For non-financial companies in the region, strategically adding fintech components has proven to be a powerful value creation strategy.

The data suggests that well-executed fintech components can contribute significantly more to a company's valuation than their proportional revenue would suggest—often commanding 1.5-2x the valuation multiple of the core business.

As financial services infrastructure continues to become more accessible, we can expect this trend to accelerate, with companies across sectors seeking to capture the "fintech premium" by embedding financial services into their core offerings. For investors, identifying companies early in this transition may represent a significant opportunity to capture value as these businesses unlock the fintech multiplier effect.

Latin America—with its combination of technical innovation, large underbanked populations, and regulatory openness to fintech models—has become the perfect proving ground for Strange's thesis. The successes of MercadoLibre, Rappi, iFood, Kavak, and Habi suggest that for many companies, the path to maximizing valuation increasingly runs through fintech.

Sources:

1. Angela Strange, "Every Company Will Be a Fintech Company," Andreessen Horowitz, January 2020, https://a16z.com/every-company-will-be-a-fintech-company/

2. MercadoLibre Q4 2024 Earnings Presentation, February 2025, https://investor.mercadolibre.com/sites/mercadolibre/files/mercadolibre/results/meli-q424-earnings-presentation.pdf

3. MercadoLibre Q4 2024 Press Release, "Mercado Libre delivers stellar Q4 2024 with net revenue of $6.1 billion and net income of $639 million," February 2025, https://investor.mercadolibre.com/news-and-events/mercado-libre-delivers-stellar-q4-2024-net-revenue-61-billion-and-net-income-639-million

4. Reuters, "Colombia's Rappi to offer digital banking services via RappiPay," June 2022, https://www.reuters.com/technology/colombias-rappi-offer-digital-banking-services-via-rappipay-2022-06-17/

5. iFood Institutional, "Is iFood a fintech? Learn about its services and how the company contributes to the digital economy," October 2024, https://institucional.ifood.com.br/en/novos-negocios/ifood-e-fintech/

6. Bloomberg Línea, "Kavak Raises a Blockbuster $700 million Series E, Becomes Most Valuable Startup after Nubank," September 2021, https://www.bloomberglinea.com/english/kavak-raises-a-blockbuster-700-million-series-e-becomes-most-valuable-startup-after-nubank/

7. Kuna Capital, "Home Page - Over 60,000 approved loans," April 2025, https://www.kunacapital.com/

8. LatamList, "Kuna launches loan platform for new and used cars in Mexico," November 2023, https://latamlist.com/kuna-launches-loan-platform-for-new-and-used-cars-in-mexico/

9. Forbes Mexico, "Kuna, la nueva plataforma para créditos de autos nuevos y usados," November 2023, https://forbes.com.mx/ad-kuna-nueva-plataforma-para-creditos-de-autos-nuevos-usados/

10. Bloomberg Línea, "Colombian Proptech Habi Becomes Country's Second Unicorn, LatAm's 43rd," May 2022, https://www.bloomberglinea.com/2022/05/11/colombian-proptech-habi-becomes-countrys-second-unicorn-and-latams-43rd/

11. TechCrunch, "Colombian proptech Habi reaches unicorn status with $200M raise co-led by SoftBank and Homebrew," May 2022, https://techcrunch.com/2022/05/11/colombian-proptech-habi-reaches-unicorn-status-with-200m-raise-co-led-by-softbank-and-homebrew/

12. F-Prime Capital Fintech Index, "EV/LTM Revenue Multiples for Fintech Sectors," April 2025 - Payment: 3.38x, Banking: 2.48x, Lending: 4.43x

13. Reuters, "Mexican used-car startup Kavak hits $4 billion valuation," April 2021, https://www.reuters.com/business/finance/mexican-used-car-startup-kavak-hits-4-billion-valuation-2021-04-07/

14. Financial industry analyst reports and valuation models from JP Morgan, Morgan Stanley, and Goldman Sachs on Latin American fintech and e-commerce companies (2023-2025)

15. Investment bank research reports on the embedded finance market in Latin America from BBVA, Itaú BBA, and BTG Pactual (2024-2025)

16. Pitchbook and LAVCA (Latin American Venture Capital Association) data on fintech investment and valuations in Latin America (2020-2025)

Latin America's fintech sector has solidified its status as a global powerhouse, driving the region's most significant IPOs and M&A deals in recent years. The 2021 IPO of Nubank, which soared to a $41.5 billion valuation, not only highlighted the transformative potential of Latin American fintech but also delivered exceptional returns for early investors. Yet, following a global market slowdown in 2022, a question lingered: Was Nubankthe peak of LatAm fintech success, or merely the opening act? The evidence strongly suggests the latter. Fintech accounts for 100% of the region's top IPOs by valuation and 40% of major M&A activity, signaling a sector that has matured and is now primed for its next chapter.

As the global IPO market shows signs of recovery, venture capitalists like QED Investors predict that

"2025 could mark a pivotal year for LatAm fintech, with the potential for one or two IPOs in Mexico and several Brazilian companies preparing for filings."

With a pipeline of unicorns poised to generate over $20 billion in investor returns through IPOs and acquisitions by 2026, the sector's future looks promising. This article revisits the playbook of past triumphs, profiles the contenders gearing up for the next wave, and spotlights the investors set to capitalize on this burgeoning opportunity.

Nubank: The Gold Standard for Fintech Investor Returns

No discussion of Latin American fintech success can begin without acknowledging Nubank's historic 2021 IPO, which valued the company at $41.5 billion. This Brazilian neobank didn't just change banking in Latin America; it redefined what success looks like for fintech investors globally.

The returns for early investors were nothing short of extraordinary:

• Sequoia Capital: $90M → $7.5B (83x return)

• Tiger Global Management: $33M → $2.4B (73x return)

• Founders Fund: $48M → $0.8B (17x return)

• DST Global: $160M → $3.9B (24x return)

• Tencent: $242M → $2.7B (11x return)

Sequoia's journey with Nubank began in 2013 when Doug Leone led the seed round. The firm recognized the opportunity early by backing co-founder David Vélez, who had previously worked as an investor at Sequoia focused on Latin America. This early conviction resulted in arguably one of the best fintech investments globally, with an 83x return that significantly outperformed typical venture capital expectations.

While Nubank's stock has experienced volatility since its IPO—as have many fintech stocks globally—it remains a testament to the scale of opportunity in Latin American fintech. The company continues to expand its user base, which now exceeds 114 million customers across Brazil, Mexico, and Colombia, demonstrating the massive untapped potential in the region.

The 2025-2026 Latin American Fintech IPO Calendar

Following Nubank's path, a new generation of fintech unicorns is approaching IPO readiness. Based on growth trajectories, funding rounds, and market signals, here are the top 10 companies most likely to go public in the next 18-24 months, ordered by valuation:

1. Creditas (Brazil) - Valued at $4.8B

Founded by Sergio Furio in 2012, Creditas has transformed secured lending in Brazil through its technology-driven approach. The company has raised over $800 million in total funding:

• Series F (2022): $260 million led by Fidelity Management

• Series E (2020): $255 million led by LGT Lightstone

• Series D (2019): $231 million led by SoftBank's Latin America Fund

• Series C (2017): $50 million led by Vostok

• Series B (2017): $18.8 million led by IFC

• Series A (2016): $7.2 million led by Redpoint eVentures, Kaszek, and Quona Capital

Creditas has demonstrated impressive business growth, with its loan portfolio reaching $1.05 billion USD as of Q4 2024. The company reported annualized revenues of $366 million USD and a gross profit of $166 million USD in the same period, showing strong progress toward profitability. Creditas has successfully diversified beyond its original secured lending focus into auto financing, home equity loans, and mortgage origination, creating multiple revenue streams that make it attractive to public market investors.

The platform's technology-driven approach to credit assessment has allowed it to serve segments traditionally underserved by Brazilian banks, fueling its rapid expansion. Market observers expect a potential listing in Q4 2025 or early 2026, which would make it one of the largest fintech IPOs from Latin America since Nubank.

2. Ualá (Argentina) - Valued at $2.75B

Founded by Pierpaolo Barbieri in 2017, Ualá has achieved remarkable growth as a financial ecosystem. The company has raised over $900 million in funding:

• Series E and Series E-2 (2024-2025): $366M led by Allianz X

• Series D (2021): $350 million led by SoftBank and Tencent

• Series C (2019): $150 million led by Tencent and SoftBank

• Series B (2018): $34M led by Goldman Sachs Investment Partners

• Series A (2018): $10M led by Soros Fund Management LLC

Ualá has experienced explosive growth, becoming the largest startup in Argentina with 8 million users as of late 2024. Six million of these users are in Argentina, representing more than 17% of the country's adult population. The company has also expanded successfully into Mexico and Colombia, with its Mexico operation adding between 100,000 to 150,000 new clients per month, the highest acquisition rate in the region.

The company has issued more than 4 million cards across Argentina and Mexico and has seen a 300% increase in payments of bills and services. Ualá recently reached 200,000 users in Colombia after just one year of operations, with a special focus on serving Venezuelan immigrants. In November 2024, Ualá secured a $300 million Series E investment round led by Allianz X, which valued the company at $2.75 billion.

Ualá is awaiting local authorities' approval after signing agreements to purchase two banks in Mexico, and expects to reach operational break-even in Argentina by Q3 2025. Its comprehensive product suite and regional expansion strategy have positioned it as a potential IPO candidate for 2026.

3. Bitso (Mexico) - Valued at $2.2B

Founded in 2014 by Ben Peters, Daniel Vogel, and Pablo Gonzalez, Bitso has become Latin America's leading cryptocurrency exchange. The company has raised over $300 million:

• Series C (2021): $250M led by Tiger Global and Coatue

• Series B (2020): $62M led by QED Investors and Kaszek Ventures

• Series A (2019): $15M led by Coinbase Ventures, Ripple, and Jump Capital

• Seed (2015): $2.5M led by Digital Currency Group

Bitso has experienced significant growth despite cryptocurrency market volatility, expanding its user base to more than 6 million users across Latin America as of 2024. The company reported a 13% rise in its user base in 2024, reaching 4.4 million active users, with crypto adoption up 12% across Latin America according to the company's reports.

As the largest crypto platform in the region, Bitso has benefited from Latin America's rising cryptocurrency adoption, particularly in countries experiencing currency instability. Mexico leads the way in cross-border stablecoin volume, with Brazil close behind. The company's strong regulatory compliance and regional leadership position it as a potential IPO candidate for 2026.

4. Clip (Mexico) - Valued at $2B

Founded in 2012 by Adolfo Babatz and Vilash Poovala, Clip provides payment solutions for small businesses in Mexico. The company has raised over $450 million:

• Series D Extension (2024): $100M led by Morgan Stanley

• Series D (2021): $250M from SoftBank Latin America Fund and Viking Global Investors

• Series C (2019): $100M led by General Atlantic and SoftBank Latin America Fund

• Series B (2017): $29.3M from undisclosed investors

• Series A (2015): $8M led by Alta Ventures

• Seed (2013): $1.7M led by Alta Ventures and Accion

Clip has established itself as Mexico's leading payment terminal provider for small businesses, with over 600,000 merchants using its solutions. The company processes approximately 40 transactions per cardholder per year in a market where card usage has historically been low. This represents significant growth potential, as Mexico has around 11 million businesses but only about 1 million of them accept cards.

In 2024, Clip has been focusing on developing new products beyond its core payment terminal business, including point-of-sale software, inventory management tools, and working capital loans. The company's recent $100 million funding round in 2024 will support these product development initiatives as it aims to serve more of Mexico's vast small business market. Clip's strong revenue growth and path to profitability position it for a potential IPO in late-2025.

5. EBANX (Brazil) - Valued at $1.5B

Founded in 2012 by Alphonse Voigt, Wagner Ruiz, and João Del Valle, EBANX has pioneered cross-border payment solutions in Latin America. The company has raised over $430 million in funding:

• Series C (2021): $430 million led by Advent International

• Series B (2018): $30 million led by FTV Capital

EBANX has established itself as the critical payments infrastructure connecting global merchants to Latin American consumers. The company processes payments for over 1,000 global merchants including Airbnb, Alibaba, Shopee, Spotify, and Uber, facilitating access to over 100 million Latin American consumers through 100+ payment methods.

In 2024, EBANX reported processing more than $10 billion in payment volume annually, with operations across 15 Latin American countries. The company has been particularly successful in enabling cross-border e-commerce, which has seen explosive growth in the region. Recent partnerships with major global payment networks have further strengthened its position in the market.

As digital commerce continues to grow across Latin America, EBANX's role as a payment facilitator positions it well for continued expansion. The company's strong unit economics and profitability profile make it a compelling IPO candidate for late 2025 or early 2026.

6. Kushki (Ecuador) - Valued at $1.5B

Founded in 2017 by Aron Schwarzkopf and Sebastián Castro, Kushki has developed a payments infrastructure that connects Latin America through a single API integration. The company has raised over $186 million in total funding:

• Series B Extension (2022): $100 million at a $1.5 billion valuation

• Series B (2021): $86 million led by SoftBank Latin America Fund

• Series A (2018): $8M led by Kaszek Ventures and DILA Capital

As Ecuador's first unicorn, Kushki has expanded to serve merchants across five countries in Latin America (Ecuador, Colombia, Mexico, Peru, and Chile). In 2024, the company received approval from Ecuadorian authorities to become the country's first payment aggregator, a significant regulatory milestone that strengthens its market position.

Kushki recently partnered with PXP Financial in October 2024 to expand its payment services across Latin America, with plans to launch card acquiring in Mexico, Chile, Colombia, Ecuador, and Peru. The company's payment infrastructure is increasingly crucial for the region's digital economy, facilitating transactions for both local and global merchants operating in Latin America. With its proven business model and strong growth across multiple countries, Kushki could be IPO-ready by late 2025 or early 2026.

7. Neon (Brazil) - Valued at $1.38B

Founded by Pedro Conrade in 2016, Neon has grown into a comprehensive digital bank. The company has raised over $700 million:

• Series E (2024): $102M from existing investors

• Series D (2022): $300M led by BBVA

• Series C (2020): $300 million led by General Atlantic

• Series B (2019): $94 million from General Atlantic and Banco Votorantim

• Series A (2018): $22 million from Propel Venture Partners and Monashees

Neon has experienced significant customer growth, with its user base consistently rising between 2018 and 2024. The company focuses on underbanked individuals and micro-entrepreneurs in Brazil, a segment that represents more than 60% of the country's population. Neon was one of the first digital banks in Brazil to eliminate fees entirely, helping build its reputation among previously underserved populations.

The company's strategic partnership with BBVA, which led its $300 million Series D round, has provided not just capital but also institutional expertise as it scales. Neon's recent $102 million funding in 2024 from existing investors demonstrates continued confidence in its business model and growth trajectory. Recent executive hires suggest preparations for a potential IPO in early 2026.

8. Konfio (Mexico) - Valued at $1.3B

Founded by David Arana and Francisco Padilla in 2013, Konfio has emerged as a leading digital banking platform for SMEs in Mexico. The company has raised over $250 million across 5 funding rounds:

• Series E (2021): $110 million led by Tarsadia Capital and QED Investors

• Series D (2019): $100 million from SoftBank

• Series C (2018): $25M led by Vostok Emerging Finance

• Series B (2017): $10M led by IFC

• Series A (2016): $8M led by Quona Capital with participation from QED Investors, Kaszek Ventures, Jaguar Ventures

Konfio addresses a critical gap in Mexico's financial ecosystem, where SMEs are traditionally underserved by conventional banks. The company operates in a market with an estimated $45 billion lending opportunity for small businesses, with potential to grow to over $100 billion as penetration increases. Mexico has approximately 4.4 million SMEs that are often starved for credit despite being crucial to the country's economy.

In 2024, Konfio has expanded beyond its core lending business to offer a comprehensive suite of financial services and software tools for SMEs, including payment processing, expense management, and accounting solutions. The company's multi-product strategy has improved customer retention and increased average revenue per user. With its last valuation at $1.3 billion in 2021, Konfio has continued to grow despite market headwinds, making it a solid IPO candidate for mid-2026.

9. Stori (Mexico) - Valued at $1.2B+

Founded in 2018 by Bin Chen and Marlene Garayzar, Stori offers credit cards to underserved segments in Mexico. The company has raised over $300 million:

• Series D (2024): $105M led by Notable Capital and BAI Capital

• Series C-2 (2022): $50M led by BAI Capital, GIC and GGV Capital

• Series C (2021): $125 million from GGV Capital, GIC, and Goodwater Capital

• Series B (2021): $32.5M led by Lightspeed Venture Partners

• Series A (2020): $10M Series A led by Bertelsmann Investments and Source Code Capital

Stori has made significant inroads in Mexico's underpenetrated credit card market, having issued over 1 million credit cards by 2024. The company targets Mexico's massive underbanked population, providing credit card access to individuals without established credit history. Stori reports high usage and activity among its cardholders, with over 20% of transactions in e-commerce, including merchants like Netflix, Didi, Mercadolibre, and Uber.

Stori is well-positioned to capture Mexico’s credit card market as it continues to expand its customer base and product offerings. The company's recent $105 million Series D round in 2024 will fuel its continued expansion as it aims to become the leading credit card issuer for the mass market in Mexico. Stori's rapid growth and strong unit economics position it for a potential IPO in late 2025 or early 2026.

10. Clara (Mexico) - Valued at $1B+

Founded in 2020 by Gerry Giacoman Colyer and Diego García, Clara achieved unicorn status in just 18 months. The company has raised over $150 million:

• Series B-2 (2023): $60 million led by GGV Capital

• Series B (2021): $70 million led by Coatue

• Series A (2021): $30M led by DST Global Partners

• Seed (2020): $3.5M led by General Catalyst

Clara has experienced rapid adoption of its corporate expense management platform across Latin America. As of 2023, the company was working with over 10,000 businesses and reported an annual run rate of 5 million credit card transactions, equivalent to $1 billion in volume. This growth has continued into 2024, as Clara expands its presence in Mexico, Brazil, and Colombia.

The company's platform combines corporate cards with sophisticated spend management software, allowing businesses to control expenses, automate approvals, and gain visibility into their spending patterns. Clara was named to the 2024 Fintech Innovation 50, recognizing its impact on the corporate expense management sector in Latin America. With its strong revenue growth and international expansion, Clara is positioned for a potential IPO by late 2025 or early 2026.

The Investors Poised to Win Big

Behind each potential IPO stands a group of investors who recognized the opportunity in Latin American fintech early. The following firms have invested in multiple companies on our list and are positioned to see returns that could rival or even exceed those generated by Nubank:

Endeavor Catalyst

Endeavor Catalyst has emerged as a quiet but significant force in Latin America's fintech ecosystem, backing an impressive 7 unicorns on our list. As the investment arm of Endeavor, the global organization that supports high-impact entrepreneurs, Endeavor Catalyst has leveraged its deep regional network to identify and support some of the region's most promising fintech companies:

• Creditas: Participated in the $50M Series C round (2018) led by Vostok Emerging Finance; estimated 8-10x MOIC based on current $4.8B valuation

• Ualá: Joined the $150M Series C round (2019) led by Tencent and SoftBank; estimated 1.8-2.3x MOIC based on current $2.75B valuation

• Bitso: Participated in the $250M Series C round (2021) led by Tiger Global and Coatue at a $2.2B valuation; approximately 1x MOIC with stable valuation

• Clip: Joined the $250M Series D round (2021) led by SoftBank and Viking Global at a $2B valuation; approximately 1x MOIC with stable valuation

• EBANX: Participated in the $30M round (2019) that valued the company at $1B; estimated 1.5x MOIC based on current $1.5B valuation

• Clara: Joined the $70M Series B round (2021) led by Coatue that valued the company at $1B; estimated 1-1.5x MOIC based on recent funding

• Neon: Participated in the $300M Series C round (2020) led by General Atlantic; estimated 1.2-1.5x MOIC based on current $1.38B valuation

Endeavor Catalyst's investment strategy focuses on Series B rounds and beyond, targeting companies that have already demonstrated product-market fit and are poised for rapid scaling. This approach has yielded varied returns across their Latin American fintech portfolio, with their early investment in Creditas standing out as particularly successful at an estimated 8-10x multiple. The firm's involvement signals strong validation within the local ecosystem, as they exclusively invest in companies led by Endeavor Entrepreneurs, providing not just capital but also access to Endeavor's global network of mentors and resources.

SoftBank Latin America Fund

SoftBank has made significant investments in the region's fintech sector, deploying billions into the ecosystem through both its Vision Fund and dedicated Latin America Fund. The firm's involvement in multiple companies on our list positions it for substantial returns:

• Creditas: Invested $231M in 2019 at a ~$750M valuation; potential 6.4x MOIC at current valuation, 8-10x at IPO

• Ualá: Co-led Series D with significant capital at a $2.45B valuation; potential 1.5-2x MOIC at IPO

• Clip: Led multiple rounds totaling over $350M; potential 1.5-2x MOIC at IPO

• Kushki: Led the $86M Series B; potential 2-3x MOIC at IPO

• Konfio: $100M investment in 2019 at sub-billion valuation; potential 3-4x MOIC at IPO

SoftBank's approach of making large, concentrated bets on market leaders positions it to benefit substantially from upcoming IPOs. While SoftBank has faced challenges in other regions, its Latin American portfolio has generally performed well, with several companies approaching profitability even in challenging market conditions.

Kaszek Ventures

As Latin America's largest early-stage VC firm, Kaszek has backed an impressive roster of fintech success stories. Founded by former MercadoLibre executives, the firm has made pivotal investments in:

• Creditas: Led Series A, estimated 40-80x potential MOIC

• Bitso: Co-led $62M Series B with QED Investors in 2020, potential 4-5x returns from this round

• Kushki: Led Series A, potential 10-15x returns on initial capital

• Konfio: Co-led the $8M Series A with Quona Capital and QED Investors, potential 15-20x returns at IPO

• Clara: Participated in the $30M Series A led by DST, potential 3-4x returns at current valuation

Kaszek's deep regional expertise and focus on backing exceptional founders has resulted in one of the strongest fintech portfolios in Latin America. The firm's early-stage focus means its potential returns could be substantial, potentially rivaling the massive multiple it achieved with Nubank, where it saw an estimated 64.8x return at IPO.

Monashees

Monashees, one of Brazil's pioneering venture capital firms, has strategically invested in several fintech unicorns across the region:

• Ualá: Participated in Series B financing, potential 7-9x returns from this round

• Neon: Led the $22M Series A alongside Propel and Quona, potential 25-30x returns from first check

• Clara: Participated in the $30M Series A led by DST, potential 3-4x returns at current valuation

Founded in 2005, Monashees was one of the first institutional venture capital firms in Latin America and has built a reputation for identifying transformative technology companies early in their lifecycle. The firm's regional expertise and long-standing presence in the ecosystem have allowed it to secure positions in some of the most promising fintech startups across multiple countries. Their early investment in Neon could be particularly lucrative, with their Series A investment potentially returning 25-30x at IPO.

QED Investors

As specialists in fintech investments globally, QED has brought deep sector expertise to its Latin American portfolio companies. Founded by Capital One Financial Services co-founder Nigel Morris, QED's investments include:

• Bitso: Co-led $62M Series B with Kaszek in 2020, potential 4-5x returns from this round

• Creditas: Participated in early rounds but didn't lead, potential 10-15x MOIC from their entry point

• Konfio: Co-led the $8M Series A with Quona Capital and Kaszek, potential 15-20x returns at IPO

QED's specialized knowledge of financial services has given it an edge in selecting winners in the region. Partner Mike Packer recently noted,

"After a challenging period, 2024 witnessed the return of international funding and the stabilization of valuations. While a surge in early seed rounds is unlikely in early 2025, many companies that raised in 2021 are expected to return to the market seeking new funding or alternative survival strategies."

Market Trends Driving the Next Wave of Fintech Liquidity

Several key trends are accelerating the growth and IPO readiness of Latin American fintech unicorns:

Open Finance and Embedded Finance

Brazil's implementation of open finance regulations has created unprecedented opportunities for fintech innovation. As QED Investors notes,

"Open finance continues to make waves in LatAm, led by Brazil's central bank trailblazing initiatives but now followed by other central banks."

This regulatory framework enables better data sharing, improved customer experiences, and new business models.

Companies that leverage these frameworks to offer embedded financial services are seeing rapid adoption. From social media payments to e-commerce integration, embedded finance is expanding the addressable market for fintech solutions across Latin America.

Blockchain and Cryptocurrency Adoption

Companies like Bitso have benefited from Latin America's growing appetite for cryptocurrency solutions. According to Bitso's latest report, Mexico leads the way in cross-border stablecoin volume, with Brazil close behind.

The region's history of currency volatility and cross-border friction has made cryptocurrency particularly relevant for Latin American users. As these technologies move toward mainstream adoption, companies that have built trusted platforms stand to benefit substantially.

AI and ML Applications

As QED Investors highlights,

"AI and ML are delivering personalized, automated, efficient and secure solutions across the region, from risk management and customer service to investment management, fraud detection and more."

These technologies are enabling unprecedented scaling opportunities by addressing key challenges in credit assessment, fraud prevention, and customer service.

The application of alternative data for credit scoring is particularly transformative in a region where traditional banking has left large segments of the population underserved. Companies that effectively deploy these technologies can achieve better unit economics while expanding their addressable market.

Growing Investor Appetite

The number of investors active in Latin American fintech has more than doubled since 2021, with both regional and global investors increasing their allocations. The success of Nubank has demonstrated that Latin American fintech companies can achieve global scale and deliver exceptional returns.

This increased investor interest is evident in both primary funding and secondary market activity (e.g., In 2023, Antonia Rojas, ex-ALLVP, and Iñigo Martinez, ex-Odetta, announced the launch of Attom Capital, the first direct secondaries VC fund in the region). The valuations of leading fintech unicorns have generally held up better than those in other sectors, reflecting continued confidence in their growth prospects and path to profitability.

Conclusion: The Future of Fintech Liquidity in Latin America

The next 18-24 months promise to be transformative for Latin American fintech, with multiple unicorns approaching IPO readiness. These upcoming exits represent a potential $20+ billion in combined market capitalization, generating billions in returns for early investors.

Looking at investor returns across these potential IPO candidates, early-stage investors (seed and Series A) are positioned for the most dramatic returns, with potential MOICs of 40-80x for Kaszek's earliest investments in companies like Creditas, 25-30x for Monashees' early bet on Neon, and 15-20x for QED and Kaszek's investments in Konfio. Meanwhile, growth-stage investors will see more varied returns: 3-5x for SoftBank's investments, 4-5x for the Series B co-leads in Bitso, and a range from 1x to 8-10x for Endeavor Catalyst depending on entry timing, with their 2018 Creditas investment showing the highest potential returns at 8-10x.

While global market conditions will inevitably influence timing, the fundamental growth drivers for these companies remain strong. The pipeline of IPO-ready companies has grown stronger since Nubank's public debut, with improved unit economics and clearer paths to profitability.

These impending liquidity events conclusively validate the initial premise that fintech is indeed the most successful venture capital vertical in Latin America. The sector has consistently delivered superior returns compared to other industries, attracted the highest-quality investors, and created the region's most valuable technology companies. The upcoming wave of IPOs and acquisitions will further cement fintech's dominant position in Latin America's startup ecosystem.

For investors still on the sidelines, the Latin American fintech story isn't over—it's just beginning its second chapter. And if Nubank's 83x returns for Sequoia are any indication, those who recognize the potential of these upcoming IPO candidates may be rewarded with outsized returns.

The broader impact extends beyond investor returns. These companies are transforming financial services across Latin America, increasing inclusion, reducing costs, and improving customer experiences. As they transition to public markets, they will set new benchmarks for success and inspire the next generation of entrepreneurs.

The journey from Nubank's groundbreaking IPO to the next wave of public fintech companies demonstrates Latin America's emergence as a global fintech powerhouse. In a region historically underserved by traditional financial institutions, technology-driven disruptors have found fertile ground for innovation, growth, and, increasingly, exceptional investor returns.

Sources:

1. QED Investors Blog, "Top 10 trends for LatAm fintech in 2025," https://www.qedinvestors.com/blog/top-10-trends-for-latam-fintech-in-2025

2. Crunchbase News, "Nubank IPO: Sequoia And The Other Big Winners In The LatAm Mobile Banking Decacorn's Public Market Debut," https://news.crunchbase.com/public/nubank-ipo-sequoia-decacorn-latam-fintech/

3. TechCrunch, "Latin America fintech will be a market to watch in 2025," https://techcrunch.com/2024/11/24/latin-america-fintech-will-be-a-market-to-watch-in-2025/

4. Funding data from Crunchbase, Tracxn, CB Insights, Reuters, and company announcements.

The buy now, pay later (BNPL) industry has reached a critical inflection point with Swedish fintech giant Klarna's filing for an IPO on the New York Stock Exchange under the ticker symbol "KLAR." As a 19-year-old pioneer in the space, Klarna's journey from a small Swedish startup to a global financial powerhouse offers valuable insights for emerging BNPL players in Latin America, where companies like Pagaleve (Brazil), Kueski (Mexico), and Addi (Colombia) are following similar trajectories, albeit at earlier stages.

Klarna's Path to IPO: Business Overview

The company's journey began with a simple yet powerful idea: bridging uncertainty in online transactions by allowing consumers to pay after receiving goods. At a time when e-commerce was still nascent and marked by consumer distrust, this innovation addressed a critical market need. By 2010, they had expanded their offerings to include Pay in Full, and by 2017, they began building a disruptive brand focused on helping consumers streamline their financial lives. The acquisition of a banking license that same year proved to be a transformative milestone in their evolution.

According to their F-1 filing, Klarna has built "one of the largest commerce networks in the world," serving approximately 93 million active consumers and more than 675,000 merchants across 26 countries as of December 2024. The company facilitated an impressive $105 billion in Gross Merchandise Volume (GMV) in 2024 alone. What's particularly notable is how they've achieved this scale while maintaining strong financial performance - in 2024, their total revenue reached $2.8 billion, representing 24% year-over-year growth, while their operating loss improved by 63% to $121 million.

This consumer growth has been remarkable, with active Klarna consumers increasing from 79 million in 2022 to 93 million by the end of 2024 - an 18% increase in just two years. This growth demonstrates Klarna's ability to continuously expand its consumer base even in mature markets, positioning the company as an increasingly essential partner for merchants looking to reach digitally-savvy shoppers.

The company's transaction margin – perhaps the most critical metric for assessing BNPL sustainability – has shown consistent improvement. Transaction margin dollars equaled $1.2 billion in 2024, representing 12% year-over-year growth. This trend demonstrates Klarna's ability to monetize its network while managing risk effectively. Their transaction margin has expanded from 36% in 2022 to 43% in 2024, showcasing the power of their operational leverage as they scale.

What's particularly instructive is how transaction margins evolve as markets mature. Data from Klarna's F-1 shows that markets launched before 2015 (including Sweden, Norway, Finland, Germany, Netherlands, Austria and Switzerland) currently generate transaction margins of approximately 57%, while the UK (launched in 2014) achieves 23%, and the US (launched in 2019) has improved from negative 84% at launch to 23% in 2024. This pattern of margin improvement as markets mature provides a roadmap for Latin American players contemplating their own growth trajectories.

Credit performance metrics reveal a sophisticated risk management approach. In 2024, Klarna's consumer credit losses represented just 0.47% of GMV, significantly outperforming industry averages. For comparison, the F-1 notes that "loan losses as a share of total loans averaged 3.7% for [Klarna's] main competitors in Sweden in 2023." This superior performance stems from their unique underwriting capabilities, which leverage proprietary data from approximately 2.9 million daily transactions across their network.

The company's credit underwriting model has improved dramatically in a short period. In the United States, Klarna has increased its Gini score (a measure of predictive accuracy in credit models) from 0.36 in 2019 to 0.72 in 2024 - exceeding the US benchmark score of 0.35. This improvement reflects the power of Klarna's machine learning models and data advantage, which have allowed them to reduce credit losses in the US from 9.6% in 2019 to just 1.1% in 2024.

A key factor in this exceptional credit performance is Klarna's focus on small-ticket, short-duration transactions. Their average balance per active consumer was just $87 in 2024, with an average loan duration of approximately 40 days. As the distribution data shows, 87% of their orders in 2024 were $500 or less, with 46% under $100 and 41% between $100-500. This concentration on smaller transactions limits potential losses upon default and allows for rapid portfolio adjustment when economic conditions change.

The funding model provides a significant competitive advantage. As of December 2024, Klarna held $9.5 billion in consumer deposits, which funded 94% of their financing products. This deposit-based approach offers substantially lower costs compared to wholesale or asset-backed financing arrangements that many non-bank competitors must rely on. Klarna's funding costs averaged 2.9% in 2024, compared to xIBOR rates in Europe of approximately 4.2% - a difference that translates directly to improved margins.

The inherent duration gap between Klarna's 40-day average loan duration and their 280-day average fixed-term deposit duration (with 74% of deposits being fixed-term) provides significant stability to their funding model. This mismatch allows Klarna to maintain low and predictable funding costs even in volatile interest rate environments, while also enabling them to rapidly adjust their loan portfolio if economic conditions deteriorate.

Revenue diversification has been another key strength. While payment processing fees from merchants remain their primary revenue source, Klarna has successfully expanded into advertising, generating $180 million in 2024 (up from approximately $13 million in 2020). This demonstrates their evolution beyond pure payments into a comprehensive commerce platform – a transformation that Latin American players would be wise to study.

Klarna's payment mix has evolved strategically over time. In 2022, Pay in Full represented 26% of GMV, Pay Later 70%, and Fair Financing 4%. By 2024, this mix had shifted to 16% Pay in Full, 79% Pay Later, and 5% Fair Financing - reflecting a deliberate focus on their core Pay Later products, which generate optimal economics. This product mix evolution provides insights for Latin American players on how to optimize their own offerings for maximum revenue and profitability.

Merchant relationships have been a key driver of Klarna's growth, with the company establishing partnerships with leading global brands across diverse verticals. The impressive penetration of top merchants in various markets - from 64% of top 100 merchants in Sweden to 29% in the United States - demonstrates their success in becoming an essential commerce partner. These partnerships create a virtuous cycle, where merchant adoption drives consumer acquisition, which in turn attracts more merchants.

The data from Klarna's partnership with On (maker of high-performance running shoes) illustrates the powerful growth dynamics these relationships can create. From 2020 to 2024, On's share of checkout with Klarna grew from 12% to 32%, while GMV increased 5x and revenue 9x. This case study demonstrates how Klarna's value proposition becomes increasingly compelling to merchants over time as they experience the benefits of higher conversion, larger basket sizes, and increased consumer loyalty.

Perhaps most impressive is Klarna's success in penetrating the U.S. market, where they've grown from a near-standing start in 2019 to becoming a significant player. Their GMV in the U.S. has grown by $19 billion over this period, and importantly, they began generating positive Transaction margin dollars in the market in 2023. This international expansion playbook offers valuable lessons for Latin American BNPL providers contemplating cross-border growth.

The expansion pattern revealed in Klarna's consumer penetration data provides insights into the BNPL adoption lifecycle. In Sweden, their most mature market (launched 2005), consumer penetration reached 81.6% by 2024. In comparison, Germany (launched 2010) achieved 33.2% penetration, the UK (launched 2014) reached 20.4%, and the US (launched 2019) attained 9.8%. This pattern suggests that sustained penetration growth continues for many years after market entry, providing confidence in the long-term growth potential for Latin American BNPL players who are earlier in their market development.

The increasing purchase frequency among Klarna's customers further demonstrates the network's growing utility. Average purchase frequency increased from 10.4 times per year in 2022 to 11.3 times in 2024, with significant variation by market maturity. In Sweden, their most mature market, consumers transacted 32 times annually by 2024, compared to just 5.4 times in the newer US market. This progression illustrates how consumer engagement deepens over time as markets mature and familiarity with BNPL increases.

Looking at cohort data, Klarna's consumer base demonstrates impressive purchase frequency growth over time. The 2019 consumer cohort made approximately 4 purchases in their first year but reached nearly 16 purchases by year six. Similarly, the 2020 cohort reached 15 purchases by year five. This cohort behavior shows how Klarna cultivates increasing loyalty and engagement over a consumer's lifecycle - a pattern that Latin American players should seek to replicate.

Klarna's proven formula for growing engagement and adoption follows a clear progression curve: from first purchase via merchant checkout, to additional purchases across verticals, to shopping anywhere with the Klarna app, to using Klarna for deals and cashback, and finally to signing up for the Klarna card. This increasing engagement drives trust and preference, with each new product adoption accelerating purchase frequency. For example, German card users made 100 more purchases per year compared to non-card users, and email connect users transacted 2.5 times as frequently as non-email connect users.

The company's revenue model has proven remarkably resilient, with strong merchant revenue retention. Klarna achieved net dollar revenue retention rates of 115% in 2023 and 114% in 2024, demonstrating their ability to expand revenue from existing merchants. Merchant cohorts from as far back as 2018 continue to grow revenue at impressive rates, with the 2023 cohort achieving a 104% CAGR since inception. This retention and expansion success illustrates how Klarna creates lasting value for merchants, rather than merely serving as a transactional payment option.

These financial results position Klarna favorably for its upcoming IPO, with the company achieving profitability in 2024 ($21 million net profit) after several years of strategic investment in growth. The path to profitability has been powered by Transaction margin expansion, disciplined operating expense management, and increasing operational leverage. From 2022 to 2024, Klarna's operating loss improved by an impressive $859 million, transforming from a $980 million loss to a much smaller $121 million loss - a testament to the scalability of their business model.

Klarna's Competitive Advantages and Strategic Assets

Several key factors have positioned Klarna for IPO success, providing a blueprint for Latin American BNPL players:

1. Banking License and Deposit-Based Funding

First and foremost is their banking license and deposit-based funding model. As stated in their F-1:

"We have operated as a licensed bank in the EEA since 2017, when the SFSA approved our application for a bank license. This license reinforced our position as a stable, trustworthy institution among our consumers and merchants."

This regulatory status enables Klarna to fund 94% of its financing products through deposits ($9.5 billion as of December 2024), providing a lower-cost and more stable funding base than non-bank competitors. This creates a virtuous cycle where deposits fund loans, which generate revenue, which attracts more deposits.

The funding advantage is clearly illustrated in Klarna's financials, where their average cost of funding was approximately 2.9% in 2024, compared to xIBOR rates in Europe of approximately 4.2%. This differential provides Klarna with a structural margin advantage over competitors relying on wholesale funding or more expensive capital market solutions. Additionally, the duration gap between their 40-day average loan duration and 280-day average fixed-term deposit duration provides significant stability even during interest rate volatility.

The banking license also grants Klarna significant flexibility in product development. As their F-1 notes,

"Our banking license allows us to design and offer financial products and services that otherwise could require third-party partnerships."

This product development agility has been crucial to their ability to adapt to changing market conditions and consumer preferences.

2. AI-Driven Efficiency and Scale

Second, Klarna has leveraged AI to drive remarkable operational efficiency. According to CEO Sebastian Siemiatkowski's statements about the company's hiring freeze,

"AI is a big piece of it. As we leaned in and explored the capabilities of AI, we realized a good portion of the kind of work that was done at Klarna will become redundant over time."

The results have been dramatic: their AI assistant has handled 62% of customer service chats since its launch, while maintaining the same customer satisfaction levels as human agents. More impressively, the company's average annual revenue per employee has increased from approximately $344,000 in 2022 to $821,000 in 2024 – a testament to AI-driven efficiency that far outpaces most financial services organizations.

3. Global Network Effects and Merchant Relationships

Third, Klarna has built powerful network effects across its ecosystem. As noted in their F-1:

"Our personalized, highly engaging consumer experiences drive consumers to our network. As more consumers engage at scale, more merchants join our network and grow their businesses. As more merchants join the network, consumers benefit from increased selection across verticals, channels and geographies."

These compounding network effects create a significant moat around their business.

The merchant success stories highlighted in the F-1 provide evidence of this network effect in action. With H&M, Klarna's share of checkout has reached nearly 50% across all markets, and in Sweden, 60% of orders from new customers are made through Klarna. Sephora has seen Klarna users shop 6.8 times per year on average, compared to 4 times for all Sephora consumers. Foodora experienced a 14% increase in Klarna consumer purchase frequency after using Klarna's advertising solutions. These examples demonstrate how Klarna creates value throughout the commerce ecosystem.

Strategic partnerships have further strengthened Klarna's position. A prime example is their recent deal with Walmart, which CNBC reported as "taking a coveted partnership away from rival Affirm." This arrangement includes warrants for OnePay (Walmart's fintech) to purchase Klarna shares, aligning the interests of both companies. As the F-1 notes, Klarna also partners with "several of the world's largest PSPs, including Worldpay, Stripe and Adyen" to enable seamless merchant onboarding.

4. Diversified Revenue Streams

Klarna has successfully diversified beyond pure BNPL fees. The company generated $180 million in advertising revenue in 2024, up from approximately $13 million in 2020. This diversification reduces dependence on transaction fees and creates additional value for both consumers and merchants.

According to the F-1: "Digital advertising represents an additional approximately $475 billion market opportunity globally (excluding China) in 2023 that we believe we are uniquely positioned to address given our unique data from intent-driven consumers."

5. Credit Underwriting and Operating Leverage

The company's proprietary data and sophisticated credit underwriting represent another significant advantage. Unlike traditional credit card issuers who typically make a single underwriting decision at account opening, Klarna makes real-time decisions for every transaction. Their credit model leverages machine learning and a unique dataset including "more than 2.5 billion SKU-level data points collected in 2024." This approach results in superior risk management, with consumer credit losses well below industry averages.

The improvement in Klarna's credit models is particularly evident in newer markets like the United States, where their Gini score (a measure of predictive power) improved from 0.36 in 2019 to 0.72 in 2024, far exceeding the U.S. benchmark of 0.35. This improvement allowed them to reduce credit losses in the U.S. from 9.6% in 2019 to just 1.1% in 2024 - a transformation that enabled positive Transaction margin dollars in that market.

Finally, Klarna's global scale provides significant operating leverage. Operating in 26 countries creates natural portfolio diversification while enabling the company to spread fixed costs across a larger transaction base. Their international presence also provides valuable diversification against local economic downturns – a consideration particularly relevant for Latin American players given the region's macroeconomic volatility.

Latin American BNPL Landscape: Current State and Growth Trajectories

The Latin American BNPL market, while still emerging compared to more mature regions, is developing rapidly with key players establishing strong positions in their respective markets. Each is navigating unique regional challenges while building scale and partnerships reminiscent of Klarna's early growth phase.

Kueski

In Mexico, Kueski has emerged as the leading BNPL provider, achieving remarkable milestones that demonstrate its growth trajectory. In October 2024, Kueski announced it had reached 20 million loans disbursed, representing 100% growth in just 18 months. The company now issues an average of one loan every two seconds, powered by innovative AI and machine learning credit decisioning models similar to those that have driven Klarna's success.

A significant recent win for Kueski was securing a partnership with Amazon Mexico in January 2024, becoming the e-commerce giant's first BNPL provider in the country. This achievement parallels Klarna's strategic focus on merchant partnerships, which has been central to their network growth. Kueski has also expanded its merchant network to include global brands like Estée Lauder, MAC, and Clinique, now boasting the highest penetration rate (nearly 30%) among the top 150 e-commerce merchants in Mexico.

Addressing Mexico's predominantly cash-based economy, Kueski launched an offline payment solution for physical stores that functions without internet connection – a crucial innovation in a country where, according to Banxico's 2023 study, 80% of transactions are still conducted in cash. This offline expansion strategy echoes Klarna's own move into physical retail through their Klarna Card and in-store payment solutions.

Addi

In Colombia, Addi has been making significant strides, with several notable developments that position it as that market's BNPL leader. In November 2024, Addi secured a $100 million credit facility from Victory Park Capital, following an $86 million equity and debt round earlier in March. This brings the company's total funding to $562 million since its founding in 2018 – impressive figures for a Latin American fintech and comparable to Klarna's early funding trajectory.

A key regulatory milestone for Addi was its successful acquisition of a banking license to operate as a regulated financial institution in Colombia. This strategic move closely resembles Klarna's own regulatory approach, positioning Addi to potentially develop a deposit-based funding model similar to what has proven so advantageous for Klarna in Europe.

Addi has also launched a marketplace platform, onboarding more than 500 merchants and processing over 20,000 monthly transactions within six months of launch. The company now serves approximately 2 million customers and 18,000+ merchants across Colombia. Perhaps most impressive has been Addi's ability to reach profitability in 2024 while maintaining a low 1% delinquency rate on loans – demonstrating strong underwriting capabilities in a market with limited credit data.

Pagaleve

In Brazil, Pagaleve has focused on leveraging the country's widely-adopted PIX instant payment system to offer installment payments, creating a uniquely Brazilian approach to BNPL. In February 2025, Pagaleve announced a strategic partnership with AliExpress to offer "PIX Parcelado" (installment payments via PIX) as a payment method. This allows Brazilian consumers to pay for purchases in up to 4 interest-free bi-weekly installments or 12 monthly installments with interest.

This integration with PIX is particularly significant given that the payment system is now used by 82% of Brazilians. By combining the immediate settlement benefits of PIX with installment capabilities, Pagaleve is creating a solution tailored to Brazilian market preferences. This localization strategy mirrors Klarna's own approach of adapting their products to local payment preferences and regulations.

Challenges & Market

While these Latin American players are making impressive progress, they still face unique regional challenges that Klarna did not encounter in its European expansion. Limited credit bureau data makes underwriting more challenging, while higher interest rate environments impact funding costs. Additionally, the predominantly cash-based nature of many Latin American economies requires innovative solutions to bridge the digital divide.

Nevertheless, the region presents compelling opportunities for BNPL. E-commerce penetration is growing rapidly, large unbanked populations remain underserved by traditional financial institutions, and credit card penetration remains low in many markets. These factors create natural demand for flexible digital payment solutions.

The Path Forward: What Latin American Players Can Learn from Klarna's Journey

Based on Klarna's journey to IPO, BNPL companies in Latin America should focus on several key strategic priorities:

1. Achieve Sustainable Unit Economics

First, achieving sustainable unit economics is paramount. Klarna's path to profitability is instructive. As noted in their F-1: "From 2022 to 2024, our Transaction margin dollars grew 77% to $1,217 million from $687 million." This improvement came from fee-driven revenue growth, scale efficiencies, declining credit losses, and improved operational leverage. Latin American players must similarly focus on transaction-level profitability before pursuing aggressive growth.

Addi's achievement of profitability while maintaining low delinquency rates demonstrates that sustainable economics are possible in the region despite macroeconomic challenges. Kueski's rapid scaling to 20 million loans suggests it too is finding viable unit economics in Mexico. Latin American players should closely monitor their transaction margins and be willing to slow growth in segments or verticals where margins are unsustainable.

2. Secure Strategic Funding and Partnerships

Second, securing strategic funding and regulatory advantages is critical. Klarna's banking license and deposit base provide significant competitive advantages that have been central to their success. As their F-1 notes, "Our banking license enables us to maintain a low-cost, stable funding model based on consumer deposits." This funding advantage has been crucial to Klarna's ability to offer competitive merchant fees while maintaining profitability.

Latin American players are pursuing different approaches based on their market circumstances. Addi's acquisition of a banking license in Colombia represents a major step toward replicating Klarna's model. For players without banking licenses, strategic partnerships with established financial institutions may provide an alternative path to stable, cost-effective funding.

3. Invest in Proprietary Technology and AI

Third, investing in proprietary technology and artificial intelligence capabilities will be essential. Klarna's technological prowess, particularly in AI, has been crucial to its efficiency and risk management. According to their F-1: "As of August 31, 2024, 96% of our employees used generative AI in their daily work." This widespread AI adoption has enabled Klarna to significantly increase revenue per employee while improving customer experiences.

The Latin American players are similarly embracing technology. Kueski highlights its "innovative AI and machine learning-powered credit decisioning models," while Addi's low delinquency rates suggest sophisticated risk modeling. As these companies grow, continued investment in AI capabilities will be critical to achieving Klarna-like operating efficiencies and credit performance.

4. Expand Beyond Core BNPL

Fourth, expanding beyond core BNPL into adjacent services represents a significant opportunity. Klarna has successfully evolved from a payment method to a comprehensive commerce network. Their F-1 describes a vision where "Klarna empowers everyone, everywhere, through seamless commerce experiences—as a personalized, trusted assistant making financial empowerment effortless."

We're seeing early signs of similar expansions in Latin America. Kueski's offline payment solution shows understanding that commerce happens beyond e-commerce. Addi's marketplace launch demonstrates movement toward becoming a shopping destination rather than just a payment method. As these companies mature, further expansion into advertising, merchant services, and additional financial products will likely follow Klarna's diversification playbook.

5. Build A Trusted Brand for Merchants and Consumers

Fifth, building strong merchant relationships is crucial for sustainable growth. Klarna's merchant network includes "some of the largest global brands," with an average of "44% of the top 100 merchants in each of the major markets" they serve. These relationships provide both scale and credibility. Latin American players should prioritize strategic merchant partnerships, particularly with major regional e-commerce platforms and retail chains.

Finally, developing a recognizable and trusted consumer brand will be essential for long-term success. Klarna has built what they describe as "a brand that is distinctly global, universally recognized and well-loved by consumers and merchants." Their global NPS of 73 demonstrates exceptional consumer loyalty. Latin American BNPL providers should invest in building trusted brands that resonate with local consumers while maintaining the global appeal necessary for eventual international expansion.

Conclusion: The BNPL Opportunity in Latin America

Latin America represents a compelling opportunity for BNPL, with high e-commerce growth rates, significant unbanked populations, and limited credit card penetration. The region's BNPL leaders are making impressive progress, adapting global best practices while solving for local market needs.

Klarna's upcoming IPO provides a valuable roadmap for Latin American BNPL aspirants. The Swedish company's journey from payment processor to global commerce network demonstrates the potential evolution path for companies like Kueski, Addi, and Pagaleve. By focusing on sustainable unit economics, securing strategic funding, investing in technology, expanding beyond core offerings, and building trusted brands, these companies may well follow Klarna to the public markets in coming years.

The unique characteristics of Latin American markets will require continued innovation and adaptation. The prevalence of cash transactions, limited credit bureau data, and varying regulatory environments across countries create challenges distinct from those Klarna faced in Europe. However, these same factors create opportunities for companies that can effectively bridge the digital divide and provide financial inclusion.

As Klarna CEO Sebastian Siemiatkowski noted in their F-1 filing, "The future of AI and everything is we're going to have digital financial assistance agents that can go and negotiate on your behalf with banks." This vision of AI-powered financial services points to where the industry is heading globally, including in Latin America.

For investors and industry participants watching the Latin American BNPL space, the rapid progress of companies like Kueski, Addi, and Pagaleve suggests that the region may produce its own Klarna-sized success stories in the coming years. While the path to IPO will undoubtedly include challenges, the foundation being laid today – built on both global fintech trends and the unique characteristics of Latin American commerce and consumer behavior – provides reason for optimism about the region's BNPL future.

As the global BNPL landscape continues to evolve, Latin American players have the advantage of learning from Klarna's two-decade journey. By applying these lessons to their unique regional context, they may not only replicate Klarna's success but potentially surpass it by creating innovative models tailored to the specific needs of Latin American consumers and merchants.

In the fintech world, there's a curious phenomenon unfolding that deserves our attention. Despite delivering extraordinary financial results, Nubank faced a puzzling market response to its Q4 2024 earnings. This disconnect between operational excellence and investor perception creates what might be the most compelling opportunity in the fintech landscape today.

Let's dive into what's really happening with Latin America's most successful fintech story.

The Numbers Don't Lie: Nubank's Record-Breaking 2024

Nubank's 2024 performance defies conventional wisdom about what's possible in financial services. The company closed the year with $11.5 billion in revenue, growing almost 60% year-over-year, while nearly doubling earnings to $2 billion. This translated to a 28% return on equity—placing Nu among the most profitable financial institutions globally.

As CEO David Vélez noted in a recent interview, "We might be one of the few financial institutions in the world that manages to both grow top line at almost 60%, as well as generate a return on equity of 28% at the same time."

The customer metrics are equally impressive: Nubank added 20 million new customers, reaching 114 million across Brazil, Mexico, and Colombia, with an 83% activity rate. These aren't dormant accounts; they represent engaged customers using an average of 4.1 products each.

Meanwhile, the efficiency ratio dropped below 30% for the first time, hitting 29.9% in Q4 2024—better than most traditional banks and many fintechs. This operational efficiency remains one of Nubank's most underappreciated competitive advantages.

Beyond Brazil: Multi-Market Success Proves the Model Works

One of the most significant narratives of 2024 was Nubank's expansion beyond its Brazilian home market. Mexico nearly doubled its customer base, reaching 10 million customers and $4.5 billion in deposits. This validates the company's ability to replicate its model beyond Brazil—a critical proof point for a company with global ambitions.

"Mexico's success is undeniable," Vélez stated, "reaching 10 million customers (+91% YoY) and $4.5 billion in deposits, proving the model works beyond Brazil."

Colombia also showed promising early traction, reaching 2.5 million customers. This multi-market success story demonstrates that Nubank's advantages aren't tied to a single market's unique conditions but rather to fundamental business model innovation.

The Revenue Expansion Story: Depth Over Breadth

While Nubank continues to add millions of new customers, the more compelling growth story lies in customer monetization. Monthly ARPAC (Average Revenue Per Active Customer) increased 23% YoY to $10.7, with mature cohorts reaching approximately $25.

This contradicts the bear thesis that Nubank can't effectively monetize its massive user base.

As David Vélez explained: "Traditional banks have $40 per customer. Now, I don't think we're going to get to $40 per customer, because there are a lot of fees that banks charge that we won't charge, so maybe we won't get to 40, but maybe we get to 25, 30 at some point."

Even conservative assumptions about ARPAC expansion suggest significant growth runway. With only a 3% share of financial services revenue in Latin America, Nubank's ceiling remains far away.

Product Diversification Driving Growth

Nubank's 2024 strategy focused on four key priorities: Mexico growth, secured lending in Brazil, high-income customers, and expanding the "money platform" beyond traditional banking.

The secured lending initiative proved particularly successful, growing 615% YoY to $1.4 billion, demonstrating the company's ability to penetrate new product segments with favorable risk profiles. In the FGTS (Anniversary Withdrawal Loans) segment, Nubank captured over 30% market share of new originations.

Meanwhile, the high-income segment saw accelerated growth, with the premium Ultravioleta product reaching approximately 700,000 customers and an impressive 84% NPS. This success in higher-value segments contradicts the narrative that Nubank can only serve mass-market customers.

The company also began expansion beyond financial services, with over one million customers making marketplace purchases, along with new travel and mobile phone (NuCel) offerings.

As Vélez describes it: "As we get close to 60% of the Brazilian adult population, with hundreds of millions of customers, we have the opportunity to grow beyond financial services and launch new verticals and products."

The Three-Act Strategy: What's Coming in 2025

Nubank's vision extends well beyond its current achievements. The company has articulated a compelling "three-act" strategy:

1. Act One: Become the largest and most loved retail banking franchise in Latin America

2. Act Two: Expand beyond banking into other verticals where complexity can be eliminated

3. Act Three: Set foundations for global expansion and develop the "AI Private Banker"

For 2025, the company will continue strengthening its foundation in Brazil, Mexico, and Colombia while taking its first significant steps toward global expansion.

As Vélez put it: "2025 is going to be the first year where we finally start making the first these more significant steps towards going beyond Latin America and thinking about a world where Nubank is more of a multi-country, multi-region, multi-continental, technology company."

The "AI Private Banker" vision is particularly intriguing—aiming to democratize financial advice in a way that could fundamentally reshape financial services:

"It is giving the experience that the top 1% today has in financial services to the bottom 50%. It is every single person around the world having a private banker that grabs your hand and tells you... this is the right product you should be investing."

The Market Disconnect: Short-Term Focus vs. Long-Term Value

Despite these results, Nubank's stock experienced a 17% drop following its Q4 earnings report that hasn't fully recovered. This disconnect likely stems from a handful of factors:

1. An EPS shortfall (actual $0.11 vs. estimated $0.12) overshadowing the bigger picture

2. Concerns about Brazil's macroeconomic environment and potential saturation

3. Misunderstanding of Nubank's multi-market strategy and growth vectors

4. Fixation on short-term metrics rather than long-term value creation

As David Vélez notes: "I think there are both. I mean, there are investors that are asking for the next quarter. There are investors that are asking for the next ten years. We like the investors that are asking about the next 5 to 10 years."

2025 Predictions: What to Watch

Based on the financial results, strategic direction, and management commentary, here are the key developments I expect for Nubank in 2025:

1. Global Expansion Announcement: Expect formal announcement of Nubank's first market(s) outside Latin America by the end of 2025, likely targeting other emerging markets with similar banking challenges -> Nubank is targeting the African and Southeast Asian markets by investing in Tyme with a lead check of $150M for 10% equity, valuing the Singapore-based startup in $1.5 billion.

   

2. ARPAC Continuation: Monthly ARPAC should continue its upward trajectory toward $12-13, driven by deeper customer relationships and product expansion.

3. Mexico Scale: Mexico will likely cross 15 million customers and become a meaningful contributor to overall profitability.

4. Beyond Banking Acceleration: The "Act Two" strategy will accelerate with more meaningful contributions from non-banking verticals like travel, telecommunications, and e-commerce.

5. AI Implementation: Early versions of the "AI Private Banker" will begin appearing in the app, initially focused on guiding investment decisions and financial education.

6. Deposit and Lending Growth: Expect continued 40%+ growth in both deposits and the lending portfolio, with secured lending becoming an increasingly important component.

7. M&A Activity: As global expansion begins, targeted acquisitions to accelerate technology capabilities or market entry become more likely -> Nubank's latest acquisition Hyperplane aligns with its "Act Three" strategy of AI-driven bank

   

The Long Game: Why Nubank Will Win

While short-term market sentiment remains volatile, Nubank's fundamental advantages position it for long-term success:

1. Superior Cost Structure: With a monthly cost-to-serve of less than $1 per customer versus $15-20 for traditional banks, Nubank can profitably serve segments that incumbents cannot.

2. Virtuous Growth Cycle: Low customer acquisition costs enable investment in product development, which drives engagement, which improves monetization.

3. Technology Advantage: By building its own core banking system and key infrastructure, Nubank maintains structural advantages in agility and cost efficiency.

4. Unique Growth Profile: Few financial institutions can deliver both high growth and high profitability simultaneously.

5. Customer Love: With industry-leading NPS scores and high engagement rates, Nubank benefits from strong word-of-mouth growth and customer loyalty.

As Vélez puts it: "In 11 years our cost to serve our customer hasn't really increased, it's less than $1 per customer. While, yes, more products mean more complexity, we get significant economies of scale. We have a lot of our own technology."

Conclusion: The Most Misunderstood Financial Success Story

Nubank represents a rare opportunity in financial services—a company delivering both extraordinary growth and exceptional profitability at scale, yet still trading at a discount to its long-term value.

For those following Latin American fintech, the question isn't whether Nubank can execute—they've proven that consistently. The question is whether investors will eventually recognize the extraordinary business being built, or continue focusing on short-term metrics.

As the gap between operational performance and market valuation persists, those who understand Nubank's true potential may find themselves looking at perhaps the most compelling opportunity in the fintech landscape today.

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This article is not investment advice. This analysis is based on Nubank's Q4 2024 earnings release, financial statements, and public comments from CEO David Vélez. What's your take on Nubank's trajectory? Reply to this newsletter with your thoughts.