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E-commerce and financial technology platforms are booming in Latin America and Visa’s recent acquisition of YellowPepper is a timely reminder of the growth opportunity in the region.
The acquisition comes after Visa invested in YellowPepper’s USD 12.5 million Series D funding round in 2018 and simultaneously entered a strategic partnership with the business.
The market dynamic behind the acquisition is the digitalisation of payments, which was vastly accelerated by the pandemic. Acquiring YellowPepper reduces the time-to-market for Visa’s digital offering, an executive for Visa Latin America said, “As the payment industry shifts from plastic to digital, it is increasingly important to collaborate with fintechs to deliver new user experiences.”
“As the payment industry shifts from plastic to digital, it is increasingly important to collaborate with fintechs to deliver new user experiences.”
Executive, Visa Latin America
Established in 2004 and operational in nine different Latin American nations, the Miami-headquartered firm claims approximately 5 million monthly active users. Visa and YellowPepper have been working on a real-time peer to peer (P2P) payments solution in Peru, which is a project that involves the BBVA, Scotiabank and Interbank.
YellowPepper’s proprietary technology enables customers to choose from a number of different payment options by using an email, phone number or other credentials to exchange money through their bank accounts. The company designs the entire payment gateway, focusing on customer experience, to improve the look and feel of the e-commerce experience.
The founder of a financial technology company in Brazil explains, “Improving the look and feel increases traffic, you can measure it. YellowPepper is the only specialist in that. They had the initial monopoly but there is an opportunity for others.”
A country manager at PayU believes the acquisition is a win-win for Visa and the Latin American e-commerce market generally, “It benefits all those who are in e-commerce since it is a matter of user experience, so they encourage online purchases, and Visa charges for the additional traffic. For others in the market, it builds consumer trust in e-commerce.”
[VISA] want to be strategic partners of all the world's bank issuers, making them understand that thanks to VISA they will have better payment collection, a critical component.
Country Manager, PayU
For Visa it is simple according to the PayU manager, “They want to be strategic partners of all the world's bank issuers, making them understand that thanks to Visa they will have better payment collection, a critical component.”
Could this be the first of many fintech acquisitions by the bigger fish in the pond? We can help you to find out!
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