Pismo's cloud-based platform for financial institutions hosts over 70 million accounts and transacts more than USD 200 billion per year, enabling clients to issue Visa and Mastercard cards.
By acquiring Pismo, Visa will be positioned to deliver core banking and issuer processing capabilities to customers via cloud-native APIs for debit, prepaid, credit, and commercial cards. Pismo's infrastructure will also allow Visa to facilitate and link financial institution clients to developing payment rails like Pix in Brazil.
According to media accounts, Visa was merely one of the numerous corporations competing for the startup, which was not looking to be purchased or even raise funds.
Pismo will maintain its present management team as part of the purchase, which is slated to finalize by the end of the year. The acquisition is scheduled to completion by the end of 2023, subject to regulatory clearances and other standard closing conditions.
It's not Visa's first foray into infrastructure. It completed its USD 2.15 billion acquisition of Tink, a European fintech firm focused on Open Banking application programming interfaces, in March 2022.
The credit card company also backed out of its planned USD 5.3 billion acquisition of Plaid, a US-based Open Banking firm, after hitting a regulatory roadblock.
This deal, however, marks the second time that Accel has purchased a financial infrastructure company that ended up getting acquired soon after. In 2020, consumer financial services platform SoFi announced that it was acquiring payments and bank account infrastructure company Galileo for USD 1.2 billion in total cash and stock. That company was founded in 2000 and bootstrapped to profitability before Accel wrote it a USD 77 million Series A check in 2019.
Pismo has raised over USD 110 million in funding from investors such as Japan's SoftBank Group, Amazon.com, venture capital firm Accel, and Headline, which originally invested in the seed round and now controls over 30% of the company.
The acquisition of Pismo by Visa represents a type of coup for the whole Latin American area, which witnessed a boom of global investors pouring funds into the region in 2021 and a bit of a retreat since then. As a result, the purchase coincides with an 82% year-on-year reduction in Latin American venture investment in May, according to data firm Sling Hub, as rising interest rates and worries of a recession jolted global markets and rocked tech prices.
Fintech businesses in Latin America have drawn substantial attention from global investors, owing to a mix of increased internet penetration, a huge unbanked population, and favourable regulatory settings. The region has seen an increase in investment rounds, with both domestic and foreign venture capital companies investing in potential fintech ventures. These investments have fuelled the growth of digital payment systems, lending platforms, personal finance management tools, and other innovative technologies, with the goal of addressing the region's distinct financial difficulties and providing inclusive financial services.
Every day we send out a free e-mail with the most important headlines of the last 24 hours.
Subscribe now