Bloomberg Línea — The Brazilian payment fintech Ebanx, which recently announced its expansion to eight more African countries and two in Latin America, totaling 29 markets in Latin America and the Caribbean, India, and Africa, has been expanding its operations without relying on investor financing or the addition of new partners through an Initial Public Offering (IPO). In an interview with Bloomberg Línea, Paula Bellizia, President of Global Payments for Ebanx, stated that the company has a “positive cash generation history.” This cash has funded the company’s global expansion.
Bellizia, who took up her position at the beginning of 2022 with global expansion as one of her primary missions, said the company examines market potential in each region as well as the specific demands of its global clients. This led to the addition of the Ivory Coast, Egypt, Ghana, Morocco, Senegal, Tanzania, Uganda, and Zambia, as well as the Bahamas and Jamaica.
According to Bellizia, who was previously the Vice President of Marketing for Google in Latin America and also served as the President of Microsoft in Brazil and Country Manager for Apple in the country, Ebanx’s financial position is a competitive advantage, especially in a context where market funds are generally restricted. This allows the company to focus on driving growth in emerging markets without considering an immediate stock market listing as a priority.
Although Ebanx filed for an IPO in 2021, the offering was postponed as capital market conditions worsened due to the prospect of rising interest rates - which later materialized early the following year in the United States. In June 2021, Advent International, the US private equity giant, invested $430 million to acquire a minority stake in the fintech founded in 2012 by Alphonse Voigt, Wagner Ruiz, and João Del Valle. It was one of the largest rounds ever raised by a Brazilian fintech.
Two years earlier, the fintech had achieved unicorn status - surpassing a valuation of $1 billion - with an investment from FTV Capital, featuring Endeavor Catalyst’s participation. Ebanx has competitors like the Uruguayan dLocal (DLO), which counts General Atlantic as an investor, and the American Stripe. The fintech, which originated in Curitiba before expanding to other markets, developed a cross-border payment processing platform to assist global companies in expanding their businesses and offering integrated payment services without the need to establish a local operation.
At its annual payment event in São Paulo at the end of September, Ebanx announced an integration with Adobe to serve emerging markets. Global companies like Sony, Uber, Shein, and Shopee are some of the payment platform’s clients.
Ebanx currently has over 1,600 active clients. The company does not disclose financial figures but stated it grew by 44% in transaction volume in 2022 compared to the previous year. Starting in 2022, the company cut costs with layoffs, reducing its staff from 1,300 people to 800. “Everyone worldwide looked at the operation from a cost perspective, but we also had a strategic focus, returning to our core as a global payments company,” said the executive.
Beyond Latin America
Ebanx prioritizes markets where it can offer solutions to its partners and meet expansion demand. The previous year, the fintech entered Nigeria, Kenya, and South Africa. Hence, it decided to scale its operation in Africa to eight more countries, in addition to entering India, eyeing its significant market potential and the growth momentum of instant payments.
In India, the fintech begins operations in a sandbox with UPI, without installments yet. The UPI (Unified Payments Interface) is an online payment system developed and adopted in the Asian country, similar to Brazil’s Pix. It’s a digital payment platform facilitating the transfer of money between bank accounts through smartphones.
Bellizia stated that Ebanx plans to expand its team in the new countries, aiming for quality and local knowledge while adapting to each market’s specific conditions. The company recently announced a regional director in Africa and a team in India.
The executive explained that, to date, Ebanx chose an essentially organic expansion, leveraging its technical and product knowledge. However, acquisitions in the future aren’t ruled out if deemed the most suitable strategy. “We haven’t seen the need to expand through an acquisition so far. Until now, the best alternative has been to expand organically, using our knowledge and platform.”
Dividing Territories
Typically, businesses (merchants) have more than one payment processing partner, meaning Ebanx shares some territories with competitors. Bellizia said Ebanx is “very meticulous about each percentage point and productivity.” “The payment battle is won in the day-to-day operation. That’s where we aim to be competitive, to be the best payment system,” she affirmed.
Bellizia emphasized that the fintech measures success based on performance and payment approval, aiming for competitiveness and delivering results to clients. “Scale is an essential vector because once we’re integrated with major brands, it’s crucial that they [merchants] solve more market needs with fewer partners, addressing more of their country portfolio,” the executive explained.
Operation in Argentina
When asked whether the fintech would eventually stop operating in Argentina due to currency uncertainties, Bellizia said, “What we’ve been doing is anticipating within,” explaining that all transactions are conducted at the official dollar rate and comply with regulations.
“Of course, Argentina’s situation requires a very close look, as the conditions to operate change with the country’s regulatory conditions. And they have changed a lot.”
In Argentina, there are currency controls and restrictions on purchasing foreign currency. This means that individuals and companies find it challenging to access US dollars and other foreign currencies, protecting their financial assets from the local currency’s depreciation.
“We also operate ‘contado con liqui,’ a supervised and legal operation in the country. We have managed to support our merchants to continue their operations despite the instability.”
The term “contado con liqui” refers to a financial operation in Argentina related to the purchase and sale of financial assets, like stocks or bonds, in foreign currency (usually US dollars) to bypass the government’s currency restrictions. It’s a way to mitigate the effect of restrictions by allowing participants to buy assets in Argentine pesos and then sell them abroad in foreign currency, typically through a foreign bank account. The transaction is so named because it involves asset delivery in exchange for “liquid” foreign currency payment.
