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Launch HN: Atrato (YC W21) – Credit Card Alternative for Latin America

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Re: Launch HN: Atrato (YC W21) – Credit Card Alternative for Latin America

#11

Post by SamBam »

leephillips wrote: post #2

Is the name related to atrasar , to postpone? Not a criticism at all, because no doubt you are offering choices to people that currently don’t exist, but isn’t 40% APR still insane? Sounds like you do some kind of quick, automated credit scoring. How does that work in Mexico and countries south? Do the big three scourges of the US reach into CA and SA?

40% does seem extremely high. For reference, most states have usury laws that kick in around 20% APR.

I'm not saying there isn't a reason for such a high rate, and obviously it's better than a 60-70% rate, if that really is the only other alternative.

But for anyone with any credit rating at all, I would imagine they would probably be better off getting a credit card and dealing with the issues alluded to. Yes, it may be easy to overspend if you're not careful, but if you are careful, the rates are likely to be much better (capped by law), and you get additional benefits to paying by CC.

That said, I haven't seen the business plan, so maybe there's some other reason beyond "I might overspend" as to why someone who could potentially qualify for a CC would get this.

Re: Launch HN: Atrato (YC W21) – Credit Card Alternative for Latin America

#12

Post by JuanCasian »

thegginthesky wrote: post #10

When you say LATAM, which countries are currently supported? This sounds awfully familiar to how credit cards work in Brazil, where merchants can let you divide payments in an arbitrary number of monthly installments. For example Amazon let's you divide up to 10 times, some brick and mortar stores let you parcel up even longer.

We are currently only supporting Mexico. As you mentioned in Brazil credit cards are really strong, but here in Mexico Credit Cards penetration is really low so there is a huge amount of people that are unable to divide their payment into monthly installments. Thats were Atrato comes in! We allow our customers to divide the payment without the need of a credit card

Re: Launch HN: Atrato (YC W21) – Credit Card Alternative for Latin America

#13

Post by JuanCasian »

thesimon wrote: post #5

> This problem is pushing a lot of people to go to department stores with their own installment credit, but with incredibly expensive interest rates (+70% APR) Surprising. At least in Brazil interest-free installment payments are extremely common, so much that prices in stores are often advertised with the installment amount. One question: With all the problems with credit cards you mention, why didn't you build a be…

From feedback we received from our customers we realized that the credit card solution is not the best for them. Credit cards are hard to understand for what they said and it also pushes them to spend more money which cause them to fall easily into an debt they can no longer pay.

Re: Launch HN: Atrato (YC W21) – Credit Card Alternative for Latin America

#14

Post by rogereur »

thegginthesky wrote: post #10

When you say LATAM, which countries are currently supported? This sounds awfully familiar to how credit cards work in Brazil, where merchants can let you divide payments in an arbitrary number of monthly installments. For example Amazon let's you divide up to 10 times, some brick and mortar stores let you parcel up even longer.

We're currently in Mexico! And yeah, here you can do that as well. The problem is that not a lot of people have a credit card (90.5% to be exact) and even if they have, they have enough credit limit and deal with the opacity, late fees, and complexity of credit cards. Also, this is defered interest, not actual installments, that means that wen you miss a payment you get charged the interest rate of your card (60% APR on average in MX)

Re: Launch HN: Atrato (YC W21) – Credit Card Alternative for Latin America

#16

Post by alejandroChavez »

SamBam wrote: post #11
leephillips wrote: post #2

Is the name related to atrasar , to postpone? Not a criticism at all, because no doubt you are offering choices to people that currently don’t exist, but isn’t 40% APR still insane? Sounds like you do some kind of quick, automated credit scoring. How does that work in Mexico and countries south? Do the big three scourges of the US reach into CA and SA?

40% does seem extremely high. For reference, most states have usury laws that kick in around 20% APR. I'm not saying there isn't a reason for such a high rate, and obviously it's better than a 60-70% rate, if that really is the only other alternative. But for anyone with any credit rating at all, I would imagine they would probably be better off getting a credit card and dealing with the issues alluded to. Yes, it ma…

It's always surprising for foreigners, specially from more financially savvy/developed countries, to see how expensive consumer credit actually is in Mexico. An average APR for credit cards (classic average ones) here would be around 60%. For instance, a large american bank that operates in Mexico (one of the largest here in terms of the market), has an average APR of almost 80% for its "Clasic" credit card. On the other side, "Platinum" credit cards for prime users do not generally go below 35-40% APR

Re: Launch HN: Atrato (YC W21) – Credit Card Alternative for Latin America

#18

Post by rogereur »

zero_kool wrote: post #9

Interesting idea, I have always wondered who could be supply side partner for startups that are trying to innovate in lending businesses. Who is the supply side of the capital that's being lent out?

We fund ourselves with credit lines from financial institutions and debt funds. They basically lend us money to lend it again.

This is really hard since there's chicken and egg problem, you have to demonstrate you know what you do before getting capital, but you need capital to prove it.

Re: Launch HN: Atrato (YC W21) – Credit Card Alternative for Latin America

#20

Post by sokoloff »

JuanCasian wrote: post #13
thesimon wrote: post #5

> This problem is pushing a lot of people to go to department stores with their own installment credit, but with incredibly expensive interest rates (+70% APR) Surprising. At least in Brazil interest-free installment payments are extremely common, so much that prices in stores are often advertised with the installment amount. One question: With all the problems with credit cards you mention, why didn't you build a be…

From feedback we received from our customers we realized that the credit card solution is not the best for them. Credit cards are hard to understand for what they said and it also pushes them to spend more money which cause them to fall easily into an debt they can no longer pay.

Both seem to allow people to pull forward purchases in anticipation of being able to afford them later.

How does Atrato prevent someone who would be prone to falling into debt if they used a credit card from not falling into debt using Atrato and its 40% APR rate?

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