Over the years, the way we think about the best way to make a positive impact on economic development has evolved. We understand that making an impact makes people want to join in, because making an impact creates value. And companies that create value create that value for the markets in which they participate, their shareholders, and their employees.
We believe that the electronic payments industry has a tremendous impact on economic development. Electronic payments aid financial inclusion, bring security to people whose alternative is to carry cash, and hinders various crimes such as tax evasion and money laundering.
A clear example is the case of PagSeguro, whose business model brought electronic payments to millions of small merchants for the first time. The market has rewarded this impact with more than 7 billion reais raised in its recent IPO.
The payments market is undergoing major changes, often attributed to new technologies such as blockchain, biometrics, among others. But the more Captalys works with payment companies, the more we see that the shifts in this industry have more to do with the transformation of payments from an operational, low value-add business into a strategic platform with the potential to add tremendous value for its users.
Also evident is that the electronic payment companies that stand out most are not those necessarily most focused on new technologies, but rather those focused precisely on what makes the industry so attractive: its impact. These companies are taking advantage of technology to bring their customers products and services designed specifically for their needs, and that take into account their economic realities. In this way, these payment companies are positioning themselves at the center of a new ecosystem of the future of commerce.
From this perspective, it is easy to understand the proliferation of value-added services being offered by payment companies, such as e-wallets, reconciliation systems, accounting software, customized POS’s for specific businesses, and, more recently, credit, in its infancy here in Brazil with initiatives such as Mercado Crédito launched by Mercado Pago (a subsidiary of Mercado Libre). Within this context we can extrapolate that part of the future of payments is not about the future of payments but, instead about future payments.
Considering the most successful payment companies are the ones creating the biggest impact for their customers, imagine the impact these companies could have if they facilitate not only payments being transacted today, but also those transacted tomorrow, the day after tomorrow, next month or even next year…. The impact would be exponential.
For good reason, payments companies are highly focused on small and medium sized companies. These companies represent more than 95% of all companies in Brazil, generate more than half of GDP, and are employ more than 50% of the population. Thus, it is hard to believe that 53% of SMEs do not have access to credit today in Brazil, according to a recent McKinsey & Co. study. With regards to the other 47% with some kind of access, almost half is via overdraft credit, according to Datafolha.
At Captalys, we believe that credit is a common good and also a force for social and economic development. That is why, since 2010, we have invested our financial, human and technological capital to enable the flow of credit to the real economy. As such, we are very excited help payments companies multiply their impact by incorporating into their payment ecosystems credit products specifically designed to take into consideration the cultural, social and economic realities of their customers.
Together, we will create even more impact. Together, we will create even more value.