Em Conversa looks to uncover the secrets in Latin America (LatAm) that have caused the fintech market to boom, from being worth less than $50million in 2016, to $2.1billion in 2022. Caetano Lacerda, CEO and co-founder of B2B payments platform Barte, explains how the company is creating more opportunities for organisations to get access to capital.
Founded in 2021, Barte is a B2B payments platform that centralises SME transactions. Its main objective of simplifying complex payment processes and unlocking growth. With one year in the market, it has a customer base exceeding 2,000 companies and projects growing more than 10 times in 2023.
The Fintech Times sat down with Lacerda to learn more about the company’s role in the LatAm B2B payments space.
Can you tell me more about the company and your role within it?
I am the CEO and co-founder of Barte, a São Paulo-based B2B payments solution built to help SMEs manage their working capital. Currently, multiple constraints arise from outdated payments infrastructure, manual processes in B2B transactions, and lack of access to capital for SMEs in LatAm.
We solve this firstly through our payments platform, which automates accounts receivables and accounts payables. All the while, it provides visibility on a company’s cash position. More specifically, examples of value add are enabling multiple payment methods on the same transaction, flexible payment schedules or automated invoicing and communications with customers, reducing delays.
The second side of our solution is that by centralising transactions in our platform. We have detailed and up to date information to accurately underwrite SMEs and finance a deeply underserved segment. Why? Because the funding gap is estimated at more than $480billion in Brazil alone.
What are some general B2B payment trends we’re seeing in Brazil?
While B2C payments have seen a large wave of innovation over the last decade, B2B has yet to capitalise on this. Given more complex purchasing flows and different standards, especially SMEs with fewer technological resources risk being left behind. That is why we built on top of recent innovations but don’t require any integration. That way, even the smallest business can benefit from using Barte.
Brazil has one of the most progressive central banks in the world. It consistently fosters innovation in the segment and positions the country as a fintech leader in Latin America. Launching PIX is a great example. This P2P payment method has been adopted by 65 per cent of the population in only two years. Furthermore, it started expanding into all types of transactions: it is a method we see being increasingly used within our platform.
Other examples are the recent regulations on open finance and the launch of Brazil’s digital currency’s first test. So we have a very exciting time ahead of us in Brazil in the payments space, with massive potential for the country to become a global reference.
However, the starting point for B2B is still lagging. While there is a new wave of innovation, most transactions still happen on legacy payment methods such as boletos, and often force companies to rely on manual processes to use them.
What is Barte doing to improve the B2B payments sector in Brazil and LatAm?
Despite the innovative ecosystem in Brazil, B2B transactions still take too much time from entrepreneurs and generate cash flow constraints simply by being inefficient. As an example, the standard settlement for a credit card transaction is 30 days. This essentially enforces net terms on merchants even when they were not negotiated.
Barte is changing that in multiple ways. By automating processes such as sending a payment link, invoicing, or reminding a customer of their upcoming payment, we reduce the time spent by companies on this. All the while, we are bringing more discipline onto when customers pay. Also, by lending to the SMEs that use the platform, we cover the gap when working capital becomes a bottleneck for growth.
Essentially, Barte is designed so that B2B SMEs can focus on their core business. Not on the back-office processes that can be automated with our platform. These currently can take up to a third of a small business owner’s time.
In other geographies, we are already studying where a solution like ours could add more value. By understanding differences such as Mexico being more cash based, or Colombia’s recent advances in open banking. But international expansion should only come at a later stage.
How does the Brazilian payments sector compare to that the rest of the world?
The Brazilian payments system is innovating fast in what is a legacy system throughout. Outdated payment methods like boletos represent c.80 per cent of B2B SME transactions. The fast rise of PIX and open banking shows promising signs of a system that can be ahead of the rest of the world.
Given a favourable regulator, increasing amounts of capital deployed in the region and startups innovating in this segment, Brazil has the potential to leapfrog the world in the maturity of its payments sector. Similar to what we’ve seen in some Asian countries with credit cards in the past decade.
In the B2C and P2P segments, my favourite use case has been the digitisation of informality through PIX. As an example, nowadays you see street musicians in São Paulo with a QR code glued to their guitar. They’re digitising what anywhere else in the world is still a cash transaction. This fast adoption of instant transactions allows for not only faster payments but also more accurate and widespread information. In turn, this has the potential to massively benefit consumers and companies alike.
What are some unique challenges associated with the region/country in the business payments space?
Financial services are always complex businesses to get off the ground. Adding to that, companies in emerging markets are forced by less mature ecosystems to be more end-to-end. In our case, this meant building a solution that combines payments and credit from scratch. Both of which are incredibly complex on their own. However, only by doing this can we address the problem of our customer entirely, and create a differential through a complete solution for working capital management.
What can you tell us about your plans for the future?
Currently, we are focused on growing our presence and product in the Brazilian market. We do still have the ambition to be a regional player and materialise our vision of turning LatAm into a global reference for B2B interactions. With that in mind, we will be exploring new markets in the medium term, after consolidating our presence at home.
In the near term, and after our recent equity round where we raised $3million from NXTP and Force Over Mass, we are structuring a dedicated debt SPV in Brazil. In doing so, we can support more companies in the ecosystem with working capital constraints and grow faster in our home market.
Any final / further thoughts?
The only thing I would add is that as a foreigner I moved to Brazil mainly for believing in how relevant Barte’s product is for SMEs in LatAm. Especially given the depth of the problem we solve here. While I still strongly believe this, I am very positively impressed by the quality of the professionals in the ecosystem. In addition to the potential the country has. It is and has been the country of the future for a while.
We like to think that at Barte we are helping that come to fruition by supporting SMEs to achieve a more sustainable business.