Pomelo, 'Send Now, Pay Later' Startup, Secures $35M Series A Funding from Vy Capital and Founders Fund

Pomelo's recent Series A funding round, led by Dubai-based venture firm Vy Capital and supported by investors like Founders Fund and A* Capital, marks a significant milestone for the startup. With $35 million raised, Pomelo is set to combine international money transfer with credit, offering a unique approach to remittance services.

This funding round, which brings Pomelo's total equity capital to $55 million, also includes a substantial expansion of its warehouse facility, amounting to $75 million. Vy Capital's involvement underscores the growing interest in Pomelo's innovative model, which integrates credit into cross-border payments.

Notably, Keith Rabois, who was instrumental in this deal before his departure from Founders Fund to Khosla Ventures, continues to support Pomelo as a board member. His endorsement, along with that of co-founder and general partner at A* Capital, Kevin Hartz, emphasizes the confidence in Pomelo's approach.

Pomelo's CEO, Eric Velasquez Frenkiel, described the Series A round as "preemptive," indicating strong investor interest. While the exact valuation remains undisclosed, Rabois highlighted Pomelo's distinctiveness in utilizing credit as the foundation for remittance transfer, signaling the startup's potential to disrupt the industry.

‍Revolutionizing Remittance: New Product Utilizes Credit Card Rails for Seamless Transactions

Pomelo's innovative approach to remittance services in the Philippines, launched in 2022, introduces a unique model that combines money transfer with credit-building opportunities. By leveraging partnerships with Mastercard, Pomelo has developed a product category termed "send now, pay later" (SNPL), operating on credit card rails.

This SNPL feature offers users in the United States a convenient and efficient way to send money to the Philippines, without incurring transfer fees typically associated with traditional cross-border transactions. Moreover, by facilitating credit-based remittance, Pomelo enables users to build their credit while engaging in international money transfers.

This partnership with Mastercard underscores Pomelo's commitment to providing innovative solutions that address the needs of both remitters and recipients. By leveraging existing credit card infrastructure, Pomelo enhances the speed and affordability of cross-border money movement, ultimately benefiting users on both ends of the transaction.

Pomelo operates by offering users the ability to set up accounts with associated credit cards, granting them control over spending limits, card pausing, and expenditure monitoring.

The platform allows senders to provide funds in the form of credit to family members, facilitating instant access to funds and offering protection against fraud and chargebacks. Additionally, for immigrants sending money back home, this method can help bolster their credit scores through increased transaction history. In case of late payments, Pomelo applies a late fee rather than interest, ensuring transparency in its fee structure.

The company generates revenue primarily through interchange fees, with foreign exchange constituting a smaller portion of its income. Since its launch in 2022, Pomelo has expanded its payment options to include the ability to transfer funds to GCash, a popular e-wallet in the Philippines. This feature is particularly significant in countries like the Philippines, where proof of payment may be required for medical treatment.

Pomelo offers customers two credit line options: an unsecured credit line allowing transfers of up to $1,000 per month, and a secured credit line where customers can deposit funds to establish credit.

With its new funding, Pomelo plans to expand its product offerings and enter the Mexican market, aiming to capitalize on the significant volume of remittances sent from the United States to Mexico annually.

The growth of cross-border fintech reflects the increasing demand for innovative solutions in the payments sector. Startups like Alza are also making waves in the consumer market, offering banking services tailored to the needs of Latin and Central American immigrants in the U.S., including FDIC-insured checking accounts and cross-border remittance capabilities.

Source: Techcrunch‍