Payments giant Visa pulled the trigger on one of the most significant acquisitions of 2023. The U.S. card behemoth made waves last week, paying $1 billion in cash for Brazilian fintech firm Pismo, a major milestone for the Latin American fintech space.
The news breathed new life into the Latam tech sector, raising hopes for a tide shift in investors’ interest in fintech in Brazil. The blockbuster deal comes amid a pullback in venture capital investments in the country.
“This is one of the largest deals involving fintechs in the world in 2023, and great news for the Brazilian innovation ecosystem,” Pierre Schurmann, CEO at Brazilian software as a service holding firm Nuvini, said. “It is a sign that M&As are making a comeback and that global investors are keeping an eye on Brazil.”
To be sure, the US giant had laid eyes on the fintech a few months ago. Pismo, a software-as-a-service fintech, had become a coveted target for large corporations. The local media reported that Mastercard had also made an offer for Pismo, but Visa’s $1 billion deal prevailed in the end.
Pismo’s customers in Brazil
Founded in 2016, Pismo provides banking and payment processing capabilities. In short, Pismo’s technology makes it easy for banks and fintechs to quickly launch card and payment products, digital wallets, and marketplaces linked to LatAm retailers.
Initially invested by Redpoint Ventures, Amazon and Softbank, the company managed to incorporate significant clients. These include Itau, Brazil’s largest traditional bank, the investment bank BTG Pactual, and the local stock market operator, B3.
“We enable our clients to launch cutting-edge payments and banking products within a single cloud-native platform – regardless of rails, geography or currency,” said Ricardo Josua, Co-Founder and CEO at Pismo. “Visa provides us unrivaled support to expand our footprint globally.”
While numerous unicorns were born in Latin America during 2020 and 2021, Pismo quietly worked to establish its business. Only now, with a decrease in investments, has the company reached a billion-dollar valuation.
Visa takes an interest in Pix with the Pismo acquisition
By acquiring Pismo, Visa will enhance banking and issuer processing capabilities across debit and credit cards. The company said it would enable it to provide connectivity for clients on “emerging payment rails, like Pix.”
“Through the acquisition, Visa can better serve our financial institution and fintech clients with more differentiated core banking and issuer solutions they can offer to their clients,” said Jack Forestell, Chief Product and Strategy Officer at Visa.
Brazil’s digital banking scene is undergoing a profound transformation led by instant payments. In late 2020, the central bank introduced the mobile payment system Pix, spurring a massive digitization wave in the country. Pix is now widely used by over 130 million adults, more than half the country’s population.
“The adoption of Pix in society has been very intense,” Carlos Eduardo Brandt, head of Pix Operations at the Central Bank of Brazil, said in a recent interview. Today it already exceeds the mark of 3 billion monthly transactions. “It is now the most used means of payment in Brazil. Even more than the debit, credit card, or any other instrument.”
The Visa Pismo deal is still subject to regulatory approvals. These are expected to come about by the end of the year. After the acquisition, Pismo will retain its current management team.
