Brazil’s Serasa Experian leads seed in PayHop fintech startup

RIO DE JANEIRO, BRAZIL – Brazil’s PayHop announced that it received a R$11.5 (US$2.2) million investment round led by Serasa Experian’s investment arm. The round also included contributions from Domo Invest and Citrino Gestão.

PayHop entered the market as a result of the Central Bank of Brazil’s new rule that changed the regulations for the registration and negotiation of card receivables in June last year. This allowed retailers to use credit card receivables as collateral, without having to pay upfront fees. In addition to PayHop, Brazilian fintech TruePay also emerged as a result of the new regulation.

The startup therefore provides credit to allow suppliers to sell their product knowing that they will receive it, while retailers do not need to advance their card receivables, but instead can use what they are due to receive as collateral to pay as the money from sales comes in.

The company’s co-founders Eduardo Rossi (CEO) and Arthur Fontana (CTO) have experience with B2B credit, payments and POS. PayHop operated for 8 months with angel money. Now, Serasa brought the startup’s first institutional round, money that will be used for product development and business growth.

“We are inserted in B2B credit. For suppliers, we work on issues related to requests that come to the commercial area and are denied. In that respect, the partnership with Serasa is perfect because it gives us access to 50,000 distributors throughout Brazil who sell to retailers. Like any B2B business, we have the acquisition cost, which is facilitated by Serasa’s base,” the CEO said.

“This is a very large market and it continues to expand. There is an avenue for us to execute, grow and specialize in this type of solution that benefits both links in the chain, the retailer and the supplier,” he said.

Fontana recalls that PayHop has built a way to mitigate late payment in distribution by offering the account receivable held by the retailer as collateral for payment to suppliers. It is as if for the supplier the model is a guarantee as a service and for the retailer a “buy now, pay later” model.

With the new regulation, the Brazilian Central Bank expects to reduce the cost of credit for small retailers. Thus, PayHop’s business model charges a fee to suppliers. “Because we enable additional sales that they wouldn’t otherwise make,” Rossi explains.

The company expects to grow 10 times this year and reach 200 suppliers with 40 people on the team.

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