40% does seem extremely high. For reference, most states have usury laws that kick in around 20% APR.

I'm not saying there isn't a reason for such a high rate, and obviously it's better than a 60-70% rate, if that really is the only other alternative.

But for anyone with any credit rating at all, I would imagine they would probably be better off getting a credit card and dealing with the issues alluded to. Yes, it may be easy to overspend if you're not careful, but if you are careful, the rates are likely to be much better (capped by law), and you get additional benefits to paying by CC.

That said, I haven't seen the business plan, so maybe there's some other reason beyond "I might overspend" as to why someone who could potentially qualify for a CC would get this.

It's always surprising for foreigners, specially from more financially savvy/developed countries, to see how expensive consumer credit actually is in Mexico. An average APR for credit cards (classic average ones) here would be around 60%. For instance, a large american bank that operates in Mexico (one of the largest here in terms of the market), has an average APR of almost 80% for its "Clasic" credit card. On the other side, "Platinum" credit cards for prime users do not generally go below 35-40% APR

Fair enough, then your does seem a lot more reasonable.

Follow up question: how can you afford to offer more reasonable rates if the credit card companies can't?

Banks are tremendously inefficient and have to support huge fixed costs for branches. Credit cards also offer a 1 month grace period without interest, so the effective yield they get is lower, thus they have to charge higher.

The cost structure of banks is mainly about credit risk (defaults), fixed costs, origination and servicing costs, and funding costs. For startups the funding costs is the biggest problem because banks fund themselves at close to 0% out of deposits. We have to raise expensive debt. As we drive this cost down, we will have much better conditions for users and merchants

I guess we are just throwing technology at problems instead of people/brick and mortar branches

Even if you are careful, I would argue that the cost with late fees (everyone forgets their payment at least by one day) + other fees will make it more expensive in the long run. Then try to cancel it and it will take you several calls and time invested.

As we drive our costs lower, we will be able to offer dramatically more low interest rates and now we are testing 0% APR programs with some of our merchants

I don't think the name is related to that. There's a river at the west of Colombia called Atrato.

Yeah. Atrasar is a bad word. It's like saying "be late". Our name comes from the Atrato River, which is a river that connects central america with south america and provides a safe way for travelers while passing through the rough and dangerous terrain of the Darien Gap.

Is the card available in Colombia or Mexico?

Mexico right now. After we get product market fit here, we will go for other countries

Sounds more like "trato" ("treaty" or "treat") but speculating doesn't mean anything

It is! And also the name comes from the Atrato river