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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

#21

Post by rogereur »

atlasunshrugged wrote: post #6

Pretty cool - but why is it that so many people in LATAM don't have credit cards? Does the existence of neobanks (I'm thinking Revolut, N26, etc.) change much in your thinking about the market?

There's a problem of access to credit, but also distrust for financial institutions. When we talk to users many don't even know that neobanks exist yet. A lot of users also don't like or don't understand credit cards because they are complex and they feel more in control with a time-defined installments program where everything is simple and clear.

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

#22

Post by rogereur »

mmacvicarprett wrote: post #7
atlasunshrugged wrote: post #6

Pretty cool - but why is it that so many people in LATAM don't have credit cards? Does the existence of neobanks (I'm thinking Revolut, N26, etc.) change much in your thinking about the market?

It should, in brasil there are around a dozen of them!

There are some. Nubank just got here. Most of neobanks are doing debit or prepaid cards at this points. Rappi also just launched their credit card

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

#23

Post by SamBam »

alejandroChavez wrote: post #16
SamBam wrote: post #11

Earlier quoted context omitted.

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 o…

Fair enough, then your does seem a lot more reasonable.

Follow up question: how can you afford to offer more reasonable rates if the credit card companies can't?

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

#24

Post by rogereur »

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…

Even if you are careful, I would argue that the cost with late fees (everyone forgets their payment at least by one day) + other fees will make it more expensive in the long run. Then try to cancel it and it will take you several calls and time invested.

As we drive our costs lower, we will be able to offer dramatically more low interest rates and now we are testing 0% APR programs with some of our merchants

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

#25

Post by rogereur »

bithavoc wrote: post #4
Gualdrapo wrote: post #3

Earlier quoted context omitted.

I don't think the name is related to that. There's a river at the west of Colombia called Atrato.

Is the card available in Colombia or Mexico?

Mexico right now. After we get product market fit here, we will go for other countries

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

#26

Post by [deleted] »

alejandroChavez wrote: post #16
SamBam wrote: post #11

Earlier quoted context omitted.

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 o…

[deleted]

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

#27

Post by rogereur »

SamBam wrote: post #23
alejandroChavez wrote: post #16

Earlier quoted context omitted.

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 o…

Fair enough, then your does seem a lot more reasonable. Follow up question: how can you afford to offer more reasonable rates if the credit card companies can't?

Banks are tremendously inefficient and have to support huge fixed costs for branches. Credit cards also offer a 1 month grace period without interest, so the effective yield they get is lower, thus they have to charge higher.

The cost structure of banks is mainly about credit risk (defaults), fixed costs, origination and servicing costs, and funding costs. For startups the funding costs is the biggest problem because banks fund themselves at close to 0% out of deposits. We have to raise expensive debt. As we drive this cost down, we will have much better conditions for users and merchants

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

#28

Post by alejandroChavez »

SamBam wrote: post #23
alejandroChavez wrote: post #16

Earlier quoted context omitted.

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 o…

Fair enough, then your does seem a lot more reasonable. Follow up question: how can you afford to offer more reasonable rates if the credit card companies can't?

I guess we are just throwing technology at problems instead of people/brick and mortar branches

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

#30

Post by rogereur »

sokoloff wrote: post #20
JuanCasian wrote: post #13

Earlier quoted context omitted.

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?

Yeah, the problem of credit cards it's all the confusing terms around payment dates, revolving balance, minimum payments. While this might sound trivial in countries with higher financial literacy. So with credit cards it is easy to just say, I'll leave some balance and pay it later. But that will start generating interest over interest, and really quick it can become a snowball trap where then your income only lets you pay the interest proportion of the debt and be looped in the vicious cycle. And on top of that, if you get a credit card, you have to deal with the risk of card fraud which might complicate things.

Our loans are time-defined, full amortizable, which means that every payment you do your debt will lower and are tied to specific purchases. So instead of easily finance anything you can't afford, people use us for specific things they need. It's just simpler, easier and will become even more affordable as we improve our terms

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