Chilean instant payments API startup Fintoc raises $7 million to turn Mexico into its main market
Summary
The fintech startups doing the legwork to make it a reality in smaller markets could become M&A targets for incumbents like Visa.One of these is Y Combinator alum Fintoc, a B2B fintech startup that has raised a $7 million Series A round of funding to consolidate its presence in its home country, Chile, and in Mexico, where it expanded one year ago.Fintocs product is an API that lets online businesses accept instant payments coming directly from the customers bank account. But the main selling point is to businesses, which pay a lower commission than the usual credit card transaction fees.Many countries now facilitate A2A, which has created tailwinds for open banking companies such as Plaid, Visa-owned Tink, TrueLayer and Volt. But its large clients mean that it is tied to frequent use cases such as topping up public transportation cards, making e-commerce purchases, covering bills and paying credit installments.Chiles population size, however, puts a ceiling on Fintocs potential growth, Griffero said. But Fintocs roadmap also reflects that the market has considerably changed compared to 2021.When Griffero and co-founder Lukas Zorich joined Y Combinators winter 2021 batch, their pitch was pretty straightforward: They were building Plaid for LatAm. This makes A2A a pretty clear upgrade; but eventually, Griffero hopes it will also replace debit cards, and later on, offer a solid alternative to credit cards.Mastercard and Visa will clearly face more competition as instant payments become commonplace with systems such as Pix in Brazil, but also UPI and India and FedNow in the U.S. A recent Bain & Company report estimates that 90% of todays payments revenue could migrate to software vendors, major technology firms, and other contenders.