BNPL App Cashea Grows in Venezuela Amid Pent-Up Demand for Credit

Buy now, pay later (BNPL) app Cashea is reportedly experiencing growth as it provides a much-needed solution to credit-starved consumers in Venezuela.

The app has gained more than 1.2 million clients in the country in just over a year, Bloomberg reported Friday (Dec. 1).

The BNPL service provided via the app is bringing customers back to checkout lines at a time when traditional credit cards have become virtually useless amid Venezuela’s economic crisis and hyperinflation, according to the report.

Venezuela’s socialist government implemented measures to combat inflation in 2019, which reduced consumer price gains but also severely restricted bank lending and consumer demand, the report said.

As a result, most credit cards in the country now have monthly limits of around $60, and consumer credit represents 2% of total bank portfolios, the report said, citing data from consulting firm Albus Data.

Cashea has met the pent-up demand for consumer credit by offering a solution that allows Venezuelan consumers access to products, according to the report. Although the app was built in Argentina, it was specifically designed for the Venezuelan market.

The app charges retailers a percentage of each transaction and has become a game changer for affiliated retailers, the report said. The average transaction price has increased by 30% to $90, indicating that when given payment options, consumers are encouraged to buy more.

One of the key factors contributing to Cashea’s success is that it caters to a demographic that has never had access to credit before, per the report. More than 95% of Cashea’s users fall into this category.

The app uses various data points to assess a user’s creditworthiness, allows consumers to pay in four installments with no interest and intervenes only if they miss a payment, according to the report. Since its launch in October 2022, default rates have dropped from 3% to 1.8%.

Cashea’s co-founder, Pedro Vallenilla, estimated that the app will add another 800,000 new users in Venezuela between Black Friday and the end of the year, averaging around 20,000 new users per day, per the report.

The app raised over $1 million in its first investment round in 2022, and Vallenilla has plans to expand the business to two more countries next year, the report said.

PYMNTS Intelligence found that while major strides still need to be made to promote financial inclusivity in Latin America, digital transactions are slowly becoming the norm among those who are banked.

Citizens who began using innovative payment technology in the wake of the pandemic have become more accustomed to these payment methods, according to the “Digitizing Payments in Latin America Playbook,” a PYMNTS and Kushki collaboration.