Bank card large Visa is buying Brazilian funds infrastructure startup Pismo for $1 billion in money in what is probably going one of many largest fintech M&A offers happening this 12 months to date.
Based in 2016 by Juliana Motta (CPO), Ricardo Josua (CEO), Daniela Binatti (CTO), and Marcelo Parise (VP of engineering), São Paulo–based mostly Pismo has quietly racked up a listing of big-name clients, together with Citi, Itaú (one among Brazil’s largest banks), Revolut, N26, Nubank and Cora. The startup processes nearly 50 billion API calls and $40 billion in transaction volumes yearly, and powers nearly 80 million accounts and over 40 million issued playing cards.
For some context of the explosive development Pismo has seen, initially of 2021, it was doing lower than $1 billion per thirty days in transaction quantity, in line with Josua. It ended 2020 with fewer than 10 million accounts whole.
Over time, Pismo has expanded out of its dwelling nation and now additionally operates in a number of international locations throughout Latin America, together with Mexico and Chile, in addition to within the U.S. and Europe. The startup additionally has some clients in India, Southeast Asia and Australia.
Pismo’s cloud-native issuer processing and core banking platform is aimed toward giving banks, fintechs and different monetary establishments “flexibility and agility,” the corporate shared when it raised $108 million in Sequence B funding in October of 2021. It does issues like permit clients to launch merchandise for playing cards and funds, digital banking, digital wallets and marketplaces. Pismo additionally claims to permit monetary establishments to “take cost of their core knowledge and use it intelligently.”
In a written assertion, Visa mentioned that by buying Pismo, it “might be positioned to offer core banking and issuer processing capabilities throughout debit, pay as you go, credit score and industrial playing cards for purchasers through cloud native APIs.” The startup’s platform can even allow Visa to offer help and connectivity for rising fee rails, like Pix in Brazil, for monetary establishment purchasers, the corporate added.
“Via the acquisition of Pismo, Visa can higher serve our monetary establishment and fintech purchasers with extra differentiated issuer options they will provide their clients,” mentioned Jack Forestell, Visa’s chief product and technique officer, in a written assertion. The deal, which is topic to regulatory approvals and different customary closing situations, is slated to shut by 12 months’s finish. Pismo will retain its present administration workforce, who will stay based mostly in São Paulo.
SoftBank, e-commerce large Amazon and Silicon Valley–based mostly enterprise agency Accel co-led the startup’s Sequence B increase. Falabella Ventures, PruVen and present backers Redpoint Ventures and Headline additionally participated within the financing, which introduced Pismo’s whole funding raised to $118 million. The corporate didn’t share its valuation, however Accel accomplice Ethan Choi informed TechCrunch that the gross sales worth was “a really strategic a number of.”
As a SaaS enterprise, Pismo largely made cash by charging transaction charges. It has charged per energetic account, so costs lower based mostly on quantity. In different phrases, the extra purchasers a buyer has, the much less they pay per account.
In a written assertion, Josua mentioned: “At Pismo, we purpose to allow our purchasers to launch cutting-edge funds and banking merchandise inside a single cloud-native platform — no matter rails, geography or forex. Visa gives us unmatched help to broaden our footprint globally and assist form a brand new period for banking and funds.”
Visa was reportedly simply one among a number of firms bidding for the startup, which was not in search of to be acquired, and even fundraising, in line with Choi.
“Pismo wasn’t on the block,” he informed TechCrunch. In addition to the transaction representing “one of many largest LatAm cross-border fintech offers that has occurred,” Choi believes it is usually “an instance of a worldwide card community deciding that they wish to get nearer to the banks and the monetary establishments they work with by offering core banking and card issuing providers to them, along with their bank card and debit card rails.”
He added: “There are a whole lot of synergies to have the ability to promote these actually crucial APIs to their present monetary establishment clients.”
It’s not the primary infrastructure play on Visa’s half. In March 2022, it closed on its $2.15 billion acquisition of Tink, a number one fintech startup in Europe targeted on open banking utility programming interfaces.
The bank card behemoth additionally famously deserted its deliberate $5.3 billion acquisition of Plaid, a U.S.-based widespread open banking startup, earlier than having to name off the acquisition after working right into a regulatory wall.
Little question that Pismo getting scooped up by Visa is a coup of kinds for your entire Latin America area, which noticed a surge in global investors pouring capital into the region in 2021 and a little bit of a retreat since. It’s additionally a comeback story, contemplating that in 2019, Pismo was working out of the money it had raised in a $900,000 seed spherical in 2016. In actual fact, issues had been so dire that Binatti and Parise even bought their solely automobile so as to fund Pismo’s operations. Now the corporate’s simply over 400 staff will turn out to be Visa staff.
The deal additionally marks the second time that Accel has bought a monetary infrastructure firm that ended up getting acquired quickly after. In 2020, client monetary providers platform SoFi introduced that it was acquiring funds and checking account infrastructure firm Galileo for $1.2 billion in whole money and inventory. That firm was based in 2000 and bootstrapped to profitability earlier than Accel wrote it a $77 million Series A check in 2019.
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