Toku Raises $7 Million to Strengthen LatAm Subscription Commerce

Toku has raised $7 million in its effort to bolster subscription commerce in Latin America.

The Chilean payments firm announced its seed round Thursday (March 23), saying the funds would allow it to expand its collection management software for subscription companies, coming at a time when many of these businesses are facing increased pressure.

“The payment landscape in LatAm is highly fragmented, with 38 countries using their own payment infrastructure and over 39 currencies,” Rocio Wu, whose F-Prime Capital led the round, said in a news release.

“Alongside fraud in the region, a major issue, payment acceptance rates are as low as 30% in some countries,” Wu continued, adding that Toku’s solution streamlines payment options and offers a “vertically-integrated SaaS solution for companies to charge more efficiently, and with greater control.”

As PYMNTS wrote last month, preventing fraud and failed payments will be crucial to subscription companies this year, which has already proven to be tough for the industry.

The February PYMNTS collaboration with Vindicia, “Subscription Commerce Tracker®,” showcases the rates of key payment pain points, declined payment details and fraud, for subscription customers.

One major takeaway of the study is that payment declines and payment fraud tend to rise and fall in lockstep. Fraud rates compared monthly haven’t yet hit the level of payment declines consumers saw in the 30 days prior to being surveyed (most recently we measured a 12% rate of payment declines versus 7.7% of payment fraud).

However, the shares of each can be large enough to make or break subscription companies, particularly those operating on the tightest margins. It’s why subscription companies dealing with today’s economic headwinds may want to consider a renewed focus on fraud, as well as payment declines, as a piece of their overall customer retention strategy.

“Methods of deployment vary, and can be accomplished in-house, through a third-party partnership or some combination of both,” PYMNTS wrote. “However, in a sector where every customer counts, the only poor choice for subscription companies may be not stepping up fraud-fighting at all.”

Toku Co-founder and CEO Cristina Etcheberry said the funding will help the company invest/expand in Mexico — “one of our most important markets” — while it also plans to open new markets in Brazil, Colombia and Peru.

“With this latest investment, we are poised to continue revolutionizing the way companies collect payments in Latin America, with a goal of serving 50,000 companies and more than 100 million customers,” she said.