Remittances from staff within the U.S. to their households and pals in Latin America amounted to $155 billion in 2023. With such an enormous alternative, banks, cash switch firms, retailers and fintechs are all making an attempt to make transfers extra handy on either side of the transaction.
Quick-growing startup Félix Pago is one in every of these gamers, and lately raised a $15.5 million Sequence A spherical of funding to develop its presence in Latin America and the U.S., TechCrunch realized completely. Its important interface is WhatsApp, with a chatbot that makes it easy to ship and obtain cross-border cash transfers, even with a voice message.
“I like to say that WhatsApp is the operating system of the region, so it makes sense that we build something on WhatsApp to make it super easy,” CEO Manuel Godoy advised TechCrunch.
WhatsApp itself already enabled peer-to-peer transactions and the choice for customers to pay companies by way of chat, however solely in Brazil and India. However a broader rollout wouldn’t be dangerous information for Félix and related options like BidSend, Leap Monetary and Zapp — if customers can use their card on WhatsApp, remittances would solely be one click on away, Godoy says.
Meta at the moment appears to see these third-party developments favorably. Its WhatsApp for Enterprise weblog highlights the use case of Nicaragua’s LAFISE Financial institution, which constructed a digital assistant in WhatsApp to make remittances smoother.
However Félix Pago has a broader purview. Apart from WhatsApp, which they have already got put in, “users don’t have to download any app,” Godoy mentioned. On the U.S. aspect, customers full many of the transaction particulars through the WhatsApp chatbot; it’s solely on the final step that they must click on on a hyperlink to securely fill of their debit card data. And on the opposite finish, cash might be collected immediately in native forex as a financial institution deposit, but in addition in money at a retailer.
Money is commonly what recipients want, so Félix Pago tailored to that actuality and made partnerships to have money pickup areas in Mexico, Guatemala and Honduras. For an additional $1.99, “the sender receives a receipt with a unique ID number and they send this receipt to the beneficiary to show it to the teller so they can pick up the cash.”
Much more is occurring behind the scenes, due to in-house and third-party instruments that Félix makes use of to adjust to its obligations and optimize its operations. There’s KYC, AML and fraud prevention; and there’s crypto, Godoy mentioned.
Through the use of Circle’s USDC stablecoin, Félix Pago is ready to make financial savings on overseas trade that it could possibly cross to customers. USDC’s 24/7 availability additionally reduces Félix’s pre-funding wants, enabling it to make the primary transaction free, as rivals Remitly and Western Union do. Félix then prices $2.50 on subsequent transactions to Guatemala and Mexico, whereas it opted for tiered pricing for Honduras. Total, this makes charges a lot decrease than on SWIFT transactions, that are additionally slower.
“Crypto is a powerful enabler for remittances, but you have to abstract that from the user. The user doesn’t care about that. I always say that it could be a donkey crossing the border, it doesn’t matter. What they want is the money, the local currency and they want it instantly at the best possible price. And crypto enables that on the back end.”
Since Félix depends on USDC and crypto companions, Godoy thinks the area experience of its new lead investor, Boston-based crypto fund Fortress Island Ventures, makes it a welcome addition to its cap desk. “We’re already leveraging some of their portfolio companies to make our infrastructure more robust, and one of their partners, Nic Carter, is one of the leading experts in USDC [and] stablecoins, so I think that gives us a lot of leverage.”
Swap Ventures, the fund that led Félix’s pre-seed extension spherical in 2023, additionally participated once more, as did buyers that took half in its earlier $2.5 million pre-seed spherical, together with HTwenty, Contour and MELI Capital, the company enterprise capital arm of Latin American e-commerce large Mercado Libre, whose partnership with Félix gave the startup a big enhance.
Underneath that partnership, Mercado promotes Félix Pago to customers of its cost platform Mercado Pago in Mexico. These referrals accounted for 25% of its new customers on the time.
The same partnership with neobank Nubank adopted, giving Félix’s progress one other bump. “The cool thing though, is that today we continue growing roughly 30% month over month, but it’s not just because of those partnerships,” Godoy mentioned.
Referrals are its important progress engine, however the firm additionally depends on influencer advertising and Fb to make itself higher recognized amongst its target market within the U.S. Up to now, most of its customers there are blue-collar Latino professionals working in development, meals and residential providers.
This makes Godoy assured that Félix will stay complementary to Nubank and Mercado Libre, even because the latter expands its fintech plans. (It’s reportedly in search of a banking license in Mexico.) “They don’t have a product in the U.S., so ultimately the sender is a Félix Pago customer.”
Félix Pago additionally hopes to assist these clients with greater than remittances. “The vision that we have for Félix is to become the trusted companion for the Latino immigrant in the U.S.” Its roadmap features a credit score builder and, ultimately, precise credit score.
First, although, the startup will use its new funding to increase into El Salvador and Nicaragua, adopted by the Dominican Republic and Colombia, after which the remainder of Latin America. That’s a necessity if Félix needs to maneuver additional on its roadmap and have an edge on different firms aiming for a similar spot.
“To become that trusted companion of the Latino in the U.S, we have to solve the [remittances] problem for all Latinos,” Godoy mentioned.