Visa Inc (NYSE: V), a leading credit card conglomerate, has agreed to acquire Brazilian cloud-based payment and banking platform provider Pismo for a staggering $1 billion in cash. This bold move, likely to be one of the largest fintech mergers and acquisitions (M&A) of the year, reinforces Visa’s commitment to expanding its fintech portfolio. It also underlines the growing importance of Latin American startups in the global fintech ecosystem.
Pismo’s Fintech Revolution
Founded in 2016 by Juliana Motta (CPO), Ricardo Josua (CEO), Daniela Binatti (CTO), and Marcelo Parise (VP of Engineering), Pismo has significantly reshaped the fintech industry landscape. The startup, headquartered in São Paulo, has accumulated an impressive roster of clients, including Citi, Itaú, Revolut, N26, Nubank, Cora, and many others. The numbers behind Pismo’s success are no less impressive:
- Pismo processes almost 50 billion API calls annually
- It powers 80 million accounts and over 40 million issued cards
- The startup handles $40 billion in transaction volumes each year
Pismo has grown exponentially since its early days. In 2021, it reported less than $1 billion in monthly transaction volume. A mere year prior, the company ended with fewer than 10 million total accounts. Today, Pismo’s services extend beyond Brazil to other countries in Latin America, including Mexico and Chile, as well as to the U.S. and Europe. It also has a presence in India, Southeast Asia, and Australia.
Pismo’s Offering: A New Era for Banking and Payments
Pismo’s cloud-native issuer processing and core banking platform empowers banks, fintech, and other financial institutions to launch products related to cards and payments, digital banking, digital wallets, and marketplaces. It gives these institutions “flexibility and agility” and helps them leverage their core data intelligently. Ricardo Josua, co-founder and CEO of Pismo, stated, “At Pismo, we aim to enable our clients to launch cutting-edge payments and banking products within a single cloud-native platform – regardless of rails, geography, or currency. Visa provides us unrivaled support to expand our footprint globally and help shape a new era for banking and payments.”
Visa’s Strategy and Synergies
In its official statement, Visa revealed that acquiring Pismo would position it to provide comprehensive core banking and issuer processing capabilities across debit, prepaid, credit, and commercial cards through cloud-native APIs. The deal would also enable Visa to support and connect with emerging payment rails, like Pix in Brazil, for its financial institution clients. Jack Forestell, Visa’s Chief Product and Strategy Officer, commented, “Through the acquisition of Pismo, Visa can better serve our financial institution and fintech clients with more differentiated issuer solutions they can offer their customers.” Pismo will maintain its management team, which will continue operating from São Paulo. Subject to regulatory approvals and other customary closing conditions, the transaction is set to conclude by the end of the year.
Looking Ahead
Visa’s acquisition of Pismo adds to the company’s series of infrastructure plays. In 2022, it completed a $2.15 billion acquisition of Tink, a European fintech startup specializing in open banking application programming interfaces. However, the company had to withdraw its planned $5.3 billion purchase of Plaid, a U.S.-based open banking startup, due to regulatory complications.
The Bidding Process and Pismo’s Funding History
Visa was not the only firm vying for Pismo. Mastercard Inc (NYSE: MA) was among several contenders hoping to acquire the startup. Despite the competition, Visa, with $19.4 billion in cash and equivalents as of March 31, emerged as the winning bidder. Interestingly, Pismo wasn’t actively seeking to be acquired or even raising funds, according to Ethan Choi, a partner at Accel. Nonetheless, the acquisition is considered a substantial success for the Latin American region, which experienced a surge in global investor capital inflow in 2021. In terms of its funding history, Pismo received significant backing from a series of investors. SoftBank, Amazon, and Silicon Valley–based venture firm Accel co-led the startup’s Series B funding round in 2021, raising $108 million. Other contributors included Falabella Ventures, PruVen, Redpoint Ventures, and Headline. This investment brought Pismo’s total funding to $118 million.
From Struggles to Success
However, Pismo’s journey was not always smooth. In 2019, Pismo faced a severe cash crunch, draining the $900,000 it had raised in a seed round in 2016. The situation became so critical that co-founders Binatti and Parise had to sell their only car to fund Pismo’s operations. Today, the company’s financial status is a testament to its resilience and determination, marking an inspirational turnaround story for startups worldwide.
Looking to the Future
With the acquisition, Pismo’s 400-strong team will join Visa’s workforce, further boosting the latter’s capabilities and reach. The deal follows a trend for Accel, who previously invested in a financial infrastructure company, Galileo, which was soon acquired by consumer financial services platform SoFi for $1.2 billion in 2020. The acquisition is expected to yield significant synergies. Visa, by providing core banking and card issuing services to financial institutions, in addition to their credit and debit card rails, will now be better equipped to serve their existing customers. Ultimately, this deal signals a positive shift in the fintech industry, showcasing the potential of startups to disrupt traditional banking paradigms and reshape the future of global payments and financial services.
