rogereur
rogereur on Hacker News
"Shallow men believe in luck. Strong men believe in cause and effect."
You don't seem to understand fusion
Could this work as an alternative to Mighty?
I think wars in the future will be about who's better at computer science. It will be programmers vs programmers, and computer literacy will become the new military service and a national security interest
Yes, exactly. It’s just like that but think as if SEARS had built the bank itself. It’s crazy but here literally two of the largest banks were created this way
Did you have any personal experience on this? We get this a lot, specially from investors, but so far have very manageable levels of loan losses with $1.5m already lent. We haven’t seen that even during COVID-19
In Mexico and other countries in LATAM, there are huge department stores that have built their own banks to give their customers credit to purchase on the store. Combined, these stores have ~20 million customers and are some of the largest banks in Mexico.
Our solution it's focused on these customers, who already have some sort of credit but find paying their purchases on installments easier, more affordable and transparent than getting with a credit card.
We are enabling other merchant that aren't as big or don't having the ability to offer financing to offer this option to the customers.
It is! And also the name comes from the Atrato river
We hope it will. At least we will try :) There are some specific things about Brazil that are materially different to our experience but will be exploring other countries
Yeah. Something we've discovered is that merchant fraud is more common with smaller businesses, so that's a challenge. There's also a natural concentration of merchants. Like Affirm drives 30% of their revenue just from Peloton. We will see something similar.
We do want to build for small businesses and merchants. We do actually have many of them, work with a lot of local bike dealers, auto shops, small electronics stores and they are happy they can offer financing to their customers. If they don't have an ecommerce or website we give them a magic link that they can send their customers through WhatsApp/Facebook.
Theres a company called Heru. They do all kinds of services for gig workers. It is definitely an interesting data-set to underwrite, you can connect to the apps APIs and pull a lot of data of these people and potentially create better financial products for them
Thanks! It is a historical regional problem and we've seen that installments in the region are pretty popular.
The name comesfrom 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. And yeah, also means that you pay "on deal" :)
Thanks! The name is two-sided, means "doing on a deal" on literal spanish and also 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.
We do work with online and offline merchants. Fortunately in Mexico regulation on credit is not restrictive on credit, the most important regulations are around AML and KYC.
They are different but they do have their similarities, specially financial services and solutions and alternatives that people use to pay for large purchases.
Will be in many LATAM countries soon. Starting with Mexico now.
Thanks for the info. Those two options, at least in Mexico (second largest country in latam) don't exist. I presume that on those countries where they do exist aren't as popular as traditional payment methods. What countries do you use those two options?
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.
Yeah, the problem of credit cards it's all the confusing terms around payment dates, revolving balance, minimum payments. While this might sound trivial in countries with higher financial literacy. So with credit cards it is easy to just say, I'll leave some balance and pay it later. But that will start generating interest over interest, and really quick it can become a snowball trap where then your income only lets you pay the interest proportion of the debt and be looped in the vicious cycle. And on top of that, if you get a credit card, you have to deal with the risk of card fraud which might complicate things.
Our loans are time-defined, full amortizable, which means that every payment you do your debt will lower and are tied to specific purchases. So instead of easily finance anything you can't afford, people use us for specific things they need. It's just simpler, easier and will become even more affordable as we improve our terms
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
Mexico right now. After we get product market fit here, we will go for other countries
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
There are some. Nubank just got here. Most of neobanks are doing debit or prepaid cards at this points. Rappi also just launched their credit card
There's a problem of access to credit, but also distrust for financial institutions. When we talk to users many don't even know that neobanks exist yet. A lot of users also don't like or don't understand credit cards because they are complex and they feel more in control with a time-defined installments program where everything is simple and clear.
Yes. It's an installment program.
We fund ourselves with credit lines from financial institutions and debt funds. They basically lend us money to lend it again.
This is really hard since there's chicken and egg problem, you have to demonstrate you know what you do before getting capital, but you need capital to prove it.
We're currently in Mexico! And yeah, here you can do that as well. The problem is that not a lot of people have a credit card (90.5% to be exact) and even if they have, they have enough credit limit and deal with the opacity, late fees, and complexity of credit cards. Also, this is defered interest, not actual installments, that means that wen you miss a payment you get charged the interest rate of your card (60% APR on average in MX)
Posted by
rogereur on Friday March 12, 2021 @10:30AM
from the self-post dept.
Hi HN! Roger here, with Juan and Alex, co-founders of Atrato (https://www.atratopago.com), from the YC W21 batch. We're building a solution for consumers to pay on installments their big purchases without a credit card in Latin America. You can see it as "Affirm for LATAM".When it comes to paying for a large purchase (let's say US$500) in LATAM, we have 2 options: paying upfront with cash or...