In a significant move to strengthen its fintech portfolio, Visa has acquired Brazilian payments infrastructure startup Pismo for a staggering $1 billion in cash. This deal marks one of the largest fintech M&A transactions of the year, solidifying Visa's commitment to expanding its core banking and issuer processing capabilities.
Founded in 2016 by Juliana Motta, Ricardo Josua, Daniela Binatti, and Marcelo Parise, Pismo has quietly attracted major players in the financial industry, including Citi, Itaú, Revolut, N26, Nubank, and Cora. The São Paulo-based startup currently powers 80 million accounts and 40 million cards, facilitating over 50 billion API calls and processing $40 billion in transaction volumes annually.
Despite having less than $1 billion in transaction volume at the beginning of 2021, Pismo's rapid growth caught the attention of investors. In October 2021, the company secured a substantial $108 million Series B investment round led by Amazon, SoftBank, and Accel. This injection of capital allowed Pismo to enhance its cloud-native issuer processing and core banking platform, enabling banks and fintechs to launch innovative payment solutions, digital banking services, and more.
Visa's acquisition of Pismo will enable the credit card giant to provide enhanced banking and issuer processing solutions across debit, prepaid, credit, and commercial cards through cloud-native APIs. Additionally, Visa plans to support emerging payment rails like Pix in Brazil, empowering financial institutions that utilize Pismo's platform.
Jack Forestell, Visa's chief product and strategy officer, highlighted the strategic importance of the acquisition, stating that it will enable Visa to offer more differentiated issuer solutions to its financial institution and fintech clients. Forestell also expressed confidence that the deal will be finalized by the end of the year, subject to regulatory approvals and closing conditions. The management team at Pismo will remain in place, ensuring a seamless transition.
Furthermore, Ethan Choi, a partner at Accel, revealed that Visa faced stiff competition in acquiring Pismo, indicating that several corporations were vying for the startup even though it was not actively seeking acquisition or funding. Choi emphasized that the transaction represents a significant milestone for the Latin American fintech ecosystem and solidifies Visa's commitment to providing critical APIs to financial institutions.
Visa's acquisition of Pismo follows its previous investments in infrastructure, such as the acquisition of European fintech startup Tink for $2.15 billion in March 2022. While Visa faced regulatory challenges in its attempted acquisition of Plaid, a popular U.S. open banking startup, the purchase of Pismo demonstrates its determination to expand its global presence and offer comprehensive banking and payment services.
With this acquisition, over 400 Pismo employees will join Visa, further enhancing the company's expertise in the banking and fintech sectors. The deal is not only a testament to the resilience and success of Pismo, which faced financial difficulties in the past, but also a significant win for Latin America, which experienced a surge of foreign investments in 2021.
This acquisition reinforces Latin America's appeal to foreign investors and positions Pismo as a major player in the region's fintech landscape.
