Kushki's journey to becoming LATAM's first next-gen payment acquirer

Thursday 12 October 2023 10:08 CET | Editor: Raluca Ochiana | Interview

Aron Schwarzkopf, founder and CEO of Kushki, shares insights into the company's journey to become LATAM's first next-gen regional payment acquirer.


Kushki recently made a significant announcement, positioning itself as the first next-generation payment acquirer in Latin America. Could you please provide more information about Kushki's mission, the specific pain points it aims to address, and its target audience?

Kushki’s mission is to connect Latin America through payments. We do this by providing a modern payment processing infrastructure. We have operational centres in each country where we operate, Mexico, Chile, Peru, Colombia, and Ecuador, creating a last-mile approach. This standardises functionality across the region, improves acceptance rates, and reduces fragmentation.

The company’s new merchant acquiring service is delivered through a single proprietary processing platform which will make card transactions more accessible, providing improvements to acceptance rates, overall settlement performance, and underwriting. As a result, Kushki anticipates growing its operations in the region by 300%.

Kushki targets large enterprises and other payment providers locally or across borders that require a modern Latin American payment partner.

What is the projected growth for digital payments in Latin America, and which segments are contributing the most to this growth?

Latin America has a young and technologically adept population, which is the catalyst of a rapid transformation around cash reduction in favour of electronic payments. There are some alternative payment products that have gained traction in some markets, but predominantly Visa and Mastercard are consistently the favoured choice for citizens migrating away from cash. Depending on the country, these brands are growing in payment volume between 25-30% YoY, which is four to five times greater than equivalent growth in the rest of the world.

What are some of the challenges that you have encountered on your journey so far?

What we do is complex and requires long-term commitment within the region. For example, the payment infrastructure in the northern hemisphere tends to have homogenous regulations, standardised service, and a commoditised infrastructure. It is the opposite in Latin America: navigating local nuances in each country has been the greatest challenge in our journey – and probably now the biggest business moat Kushki has in the market.

Until today, merchants and payment companies in Latin America were obliged to depend on one or more local acquirer processors per country – which usually have operated as monopolies established in the 90s with little incentive to create broader access into the ecosystem or innovate their legacy infrastructure. This has prompted regulators across the region to work with companies like Kushki to open the market and broaden the ecosystem. After seven years since its founding, the company has been approved by local regulators in the named countries, becoming the first non-bank entity to be approved to operate as a merchant acquirer.

Kushki stands out by offering direct connections to primary payment networks. This means merchants and other businesses that wish to be part of the regional payment ecosystem will be able to directly link to and communicate with top payment networks and systems in Latin America without relying on additional intermediaries or third-party banking institutions.

The introduction and integration of Pix have been hailed as one of the most transformative events in the payments industry over the last decade. To what extent are other Latin American countries replicating the success of Pix? Additionally, could you elaborate on thriving payment methods beyond debit and credit cards?

The story of Pix is nothing but amazing – and a great example of the velocity of change and opportunity happening in Latin America, even when it's proposed by some unusual entity, like a central bank. That said, my concern is that the debate, country per country, within the region to adopt real-time payment networks like Pix is hasty and unformed, which may lead to fragmentation.

Unlike places in Asia, there's yet to be traction on alternative payment methods other than Pix in Brazil and Yape in Peru.

Can you provide further insights into Kushki’s plans and strategic roadmap?

To understand where Kushki is going it's best to analyse where we are now. Today’s announcement unveiling an integrated merchant acquirer in Latin America is a project that took our team over six years to deliver – we are a seven-year-old company. Our plans are to go deeper and wider into the payment infrastructure within Latin America. Our clients and payment partners should feel reassured they have a long-term specialised and committed partner in the region. 

Today we are announcing that Kushki has become the first next-generation merchant acquirer in the region. This includes primary membership with Visa and Mastercard in Mexico, Chile, Peru, and Colombia through a partnership, all delivered through a standardised modern proprietary processing platform, making it one of the largest acquirers in the region by coverage. 

About Aron Schwarzkopf

Aron Schwarzkopf is an Ecuadorian-American serial entrepreneur. He is the founder and CEO of Kushki, a payment infrastructure company in Latin America. He previously served as founder and CEO of Leaf, a fintech based in Cambridge, MA, which was purchased in 2014 by Heartland Payment Systems (now Global Payments). In his various roles within the financial technology space, Schwarzkopf has focused primarily on developing the new generation of money, mobile operating systems for commerce, mobile point-of-sale applications, and consumable APIs for an enterprise toolset. Furthermore, he is accredited as one of the first executives to introduce an ‘open platform’ approach to the merchant acquiring industry.

About Kushki

Kushki connects Latin America through payments and provides businesses in the region with the technology tools to reduce transaction costs and complexity, while improving acceptance rates and reducing fraud. As a non-bank regional aggregator, gateway, and acquirer, Kushki plays a key role in the payments ecosystem.

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Keywords: payments , local payment method, digital payments, merchants, financial institutions, debit card
Categories: Payments & Commerce
Companies: Kushki
Countries: World
This article is part of category

Payments & Commerce


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