- FintechM&A
- June 29, 2023
- 4 minutes read
Visa To Buy Brazilian Banking Startup Pismo For $1B
Visa Inc (NYSE: V), the American payments processing giant, is expanding its Latin American footprint with a major acquisition. It…
Visa Inc (NYSE: V), the American payments processing giant, is expanding its Latin American footprint with a major acquisition. It has struck a deal to acquire Pismo, a Brazilian banking infrastructure startup, for $1bn in cash. The deal marks one of the largest startup exits in Latin America and the largest disclosed from the region this year.
- Visa is best known for issuing debit, credit, and prepaid cards to global customers and charging fees for moving money between merchants and financial institutions. It has a very lucrative business that brought in $15bn of net income on $29bn in revenue in 2022.
- Pismo is a cloud-based platform that enables banks and financial technology startups to launch digital products. For instance, a fintech startup can use Pismo’s infrastructure to issue cards to their customers, or another can use the company’s infrastructure to facilitate loan disbursement and repayment.
- Pismo was founded in 2016 and has raised roughly $118mn from venture capitalists. A $1bn exit for a seven-year-old startup is a global rarity and more so in Latin America.
By acquiring Pismo, Visa can expand its footprint in Latin America and build a more formidable business. The payments giant is keen on acquiring digital banking infrastructure startups to get a foothold in the nascent space. In 2021, it paid nearly $1bn for Britain’s Currencycloud; in 2022, it paid $2bn for Tink, a German startup. These two startups provide similar services to Pismo: a cloud-based infrastructure enabling businesses to offer digital banking products to their customers.
In 2020, Visa signed a $5bn deal to buy Plaid, an American banking infrastructure startup, but called it off a year later following an antitrust lawsuit. The company is obviously keen on spending its large profits to expand its tentacles in the global payments sector.
- Pismo was founded by seven entrepreneurs from Brazil. It operates across Latin America, Europe, India, Southeast Asia, and North America. The company currently has 400 employees that’ll join Visa once the acquisition closes; the American acquirer said it’d retain Pismo’s management team.
- Mastercard, Visa’s arch-rival, was reportedly interested in acquiring Pismo but appears to have been outrivaled. Barring regulatory obstacles, the acquisition is expected to close by this year’s end.
