American Express Backs Mexican Fintech Startup Clip As Emerging Markets Warm To Financial Startups

Investment in new financial technologies is exploding globally, and as traditional players look for opportunities they’re increasingly turning their attention to technology companies in emerging markets.

The latest company to benefit from the newfound attention on technologies to facilitate payments and credit and debit card adoption in emerging markets is the Mexican startup, Clip, which raised $8 million in a Series A round (one of the largest in the country’s largest early-stage investments).

Launched in 2013 by two former PayPal employees, Adolfo Babatz and Vilash Poovala, Clip is aiming to be the Mexican equivalent of Square, with a mobile payment service that allows small merchants to accept credit and debit cards — and online payments.

The company has its roots in work that the two co-founders were doing at PayPal. “We were very bad at selling this internally about how big this could become,” Adolfo says. “Nine months later Square came out.”

Based in Mexico City, but with developers and engineers in Menlo Park, Calif., Clip is trying to stay true to its California roots while it explores what Adolfo says is a massive opportunity in the Mexican market.

The company estimates that there are 11 million businesses that could potentially use Clip’s payment services, and unlike the U.S. where penetration rates for card payment systems is at roughly 50%, in Mexico that number looks more like 9%.

So there’s nothing but room to grow, according to Babatz, in a market where the only competitors are the Stockholm-based payment technology company iZettle, and cold, hard cash.

Clip’s launch comes as interest in financial technology companies has reached a fever pitch. Last year, investment in financial technologies reached $12.21 billion globally, and international investors began spending some of that money outside of their home countries.

The Nigerian mobile money company, Paga, raised funds from a syndicate including Adlevo Capital and the Capricorn Investment Group; and last year Union Square Ventures invested $1.1 million in the seed round for Sr. Pago, a Mexico City-based mobile payment platform.

Clip’s first partner is American Express, which represents 30% of the total payment volume in Mexico, but only has 3 million of the roughly 30 million credit and debit cards in use in the country.

Now, there are contracts with American Express, Banorte, Banamex and Bancomed, says Babatz.