:quality(75)/cloudfront-us-east-1.images.arcpublishing.com/bloomberglinea/I5CFQXKILZHBBO5LZE3BU35F2M.jpg "Pagaleve is a BNPL company, a business model its founders refer to in Brazil as \"intelligent installment\".")
Bloomberg Línea — Brazilian fintech and buy-now-pay-later (BNPL) startup Pagaleve has raised a $25 million Series A led by Salesforce Ventures, the investment arm of Salesforce. The startup is Salesforce Ventures’ first investment in Brazil.
Besides the equity investment (in exchange for an equity stake) Pagaleve raised venture debt led by a US fund. Pagaleve did not disclose the amount or the company that made the financing.
Henrique Weaver, Pagaleve’s CEO, set up the company in early 2021 with CTO Michael Greer. Weaver has worked at Coca-Cola and McKinsey and was one of the leaders of Uber in Brazil, as well as president of Indian startup Oyo, invested by SoftBank for hotels.
Greer, meanwhile, has also served as CTO at Zip, an Australian BNPL unicorn.
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In Brazil, Pagaleve’s partners refer to the BNPL business model as “intelligent installment”.
The company offers a retail installment payment method without the need for a credit card and with no interest. The idea is to reach three main groups: part of the Brazilian population that still does not have a credit card, those who have no limits available, and generation Z, who do not like to use credit cards.
The platform offers installments up to four times using Brazil’s instant payment system Pix for transactions.
Today, Pagaleve is integrated with e-commerce APIs such as Vtex, Shopify and Nuvemshop, as well as more than 500 retail outlets.
According to Weaver, Pagaleve’s risk analysis takes less than five seconds. Through the model, the CEO ensures that retailers make more money through increased revenue and reduced cash-flow capital cost.
“Credit cards take a month to pass on one of the sales. Small and medium retailers are left with the noose around their neck in relation to cash and have to pay an additional up to 5% to anticipate receivables. With Pagaleve, the retailer receives the day after the purchase,“ he said.
The Pagaleve founder also explains that the risk analysis engine is the biggest entry barrier for competitors who want to have similar businesses. The risk analysis is done for each purchase.
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“We built our engine from scratch, with machine learning algorithms and artificial intelligence. We know the Brazilian market and high approval rate, above 50% for non-collateralized installments,” Weaver said.
The company makes money by charging a percentage fee in relation to the retailer’s sales.
If the user does not pay Pagaleve’s installment, they do not have to bear interest, but there is a one-time late fee of 20 reais ($3.97) for purchases with installments above 20 reais.
For those purchases in which the installments are less than 20 reais, the fee is 10 reais.
Pagaleve says it has “tens of thousands of unique consumers” and by the end of the year expects to reach “hundreds of thousands” and double the number of partnerships with retailers to 1,000. Today, the company has partnerships with Arezzo’s Grupo Reserva, Rihappy, Mizuno, Tokstok, and Lupo, among other brands.
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