https://blog.palenca.com/https://blog.palenca.com/favicon.pngPalenca: API de nómina https://blog.palenca.com/Ghost 3.34Sun, 19 Sep 2021 14:33:13 GMT60We're finally starting to witness a boom of tech activity in Latin America. The region is massive, with a population of over 650 million people.  Widespread smartphone adoption, changing consumer behavior, and large incumbents notorious for bad treatment of consumers amount to a great environment for startups to disrupt.

As

]]>
https://blog.palenca.com/truora/61266d4758395d001c94bb97Tue, 07 Sep 2021 23:30:00 GMT

We're finally starting to witness a boom of tech activity in Latin America. The region is massive, with a population of over 650 million people.  Widespread smartphone adoption, changing consumer behavior, and large incumbents notorious for bad treatment of consumers amount to a great environment for startups to disrupt.

As a result, more VC funding than ever before has opened the floodgates for tech companies to offer the Latin American population new digital products and services. For some context, in 2018 there was USD $1.9 billion of venture capital invested in the region, in 2020 that number was $4.1 billion. For 2021 it's expected to be between $8-$9 billion, with half of that going only to fintech.

There's a lot of money invested in Latam tech, and this is only the beginning.

Operating in Latin America is not that simple

If you really want to dig deep into the Latam tech boom, understand the key players and the general dynamics of the market, you should start with a16z's Angela Strange, specifically in this article and on the 20VC Podcast with Harry Stebbings talking about Latam. From both resources you can begin to grasp just how complicated a region Latam is.

For starters, a large part of the population remains unbanked (32% in Colombia, 50% in Mexico). Also, cash still rules in Latin America: in Mexico 87% of transactions were made in cash in 2020; in Brazil, the country with the highest penetration of digital payments in the region, that number was 74% in 2020.

If that's not enough chaos, the region is notorious for having the most fraud in the world. Per a16z:

Card-not-present fraud is the highest in the world in Mexico, followed by Brazil. It’s estimated that approximately 20 percent of new user accounts created in Latin America are fraudulent, which puts the region at almost 2x the global level.

So for example, a last mile delivery marketplace opens in Mexico and will receive an application from a courier that wants to work on their platform. Now the process of vetting the courier would seem straightforward: verify the application comes from a real person (not a fraudulent user account), check government databases to see if the courier has a criminal record. Good luck with that.

Once again, per Angela Strange (check out min. 24 of the podcast):

The piece you don't understand until you get into the [Latin American] market is around infrastructure... You [still] have to build all of this infrastructure and technology that's not entirely obvious.

Enter Truora (YC W19) and Palenca (YC S21), two [not entirely] obvious solutions to this huge infrastructure problem.

Truora: the background check

Truora is a Colombian start-up that offers innovative fraud prevention technologies for validating users and performing KYC processes. Truora’s background check works by submitting a picture of a national ID, it then verifies identity, and operates by searching several databases to obtain a person’s criminal and legal records, also matching the name with international databases of wanted criminals.

Truora's product is incredible.

Check out how it works with the example we mentioned before, the gig economy driver looking for a loan submits a picture of his national ID, and this is the information the fintech company will be able to see:

Truora + Palenca: the Ultimate Background Check for Latin America

Both of the original questions are solved, this person is not a criminal,  and we can also know for certain that this user account is not fraudulent (important to know in a region where 1 of every 5 accounts will be fraudulent). But is this enough information to accept the courier on the platform? Not quite.

Palenca - beyond the background check:

Background checks are essential, especially when approving clients for loans, partners for delivery platforms, marketplaces and countless other use cases. However, not all bad actors have criminal or legal records, and this is particularly true in Latin America. That's where Palenca comes in. We offer the only Payroll API to verify identity and employment data directly with a user's employer.


So let's go back to our example and see Palenca in action. The courier is not a criminal, but we can get more information about him before he can be approved to work on the new platform. Most gig economy workers in Latin America (around 70%) work in more than one platform, so we can use this to the platform and courier’s advantage.  The courier can insert his credentials for any of the gig economy platforms he works in (in this case his Rappi credentials), the company will be able to see his basic profile information to verify his identity (worker ID, name, fiscal ID, bank account info), his earnings on the other platform (both real time and historical) to validate his income, and finally some useful behavioral information like this:

{
	"rating": 3.5,
	"debt_pending": 814.0,
	"acceptance_rate": 0.64,
}

We can see this driver has a low rating (any rating below a 4 is considered bad in Rappi), he has a debt pending of $814 MXN with the platform (since many of the payments are in cash, the driver still has to deposit the cash to the company), and an acceptance rate of .64, which means this driver only accepts around 6 of every 10 trips he is requested, (for context: the median acceptance rate is .9).  This information gives the company a much clearer picture of their potential client. In this case, the courier is not an ideal candidate, in fact we went from seeing a 10/10 in a background check to a 3.5/5 and a questionable work ethic.

The real magic: harness the power of both tools

The goal here isn't to prove that gig economy drivers without criminal records shouldn't be approved for loans, in fact the idea is the opposite. The point of this example is to highlight how the traditional tech infrastructure doesn't really work in Latin America, but the tools to work around that "infrastructure gap" are already being built.

The combination of Truora's background checks with Palenca's employment verification tools help make up for that huge gap, both of our goals is to make sure companies operating in Latin America can feel confident replacing and complementing the traditional KYC tools with ours, and to give millions of people in Latin America that don't have access to the financial system access to more products and services with alternative sources of data they do have.

]]>

A very long line

The first time I came to visit Mexico City was in December 2012. I really liked all the touristy locations the city has to offer but one thing surprised me above all else: the very long line of people in front of the bank ATMs. From

]]>
https://blog.palenca.com/cash-is-king-in-latin-america/611460ae0f28bd001c8e813dSat, 21 Aug 2021 22:18:37 GMT

A very long line

The first time I came to visit Mexico City was in December 2012. I really liked all the touristy locations the city has to offer but one thing surprised me above all else: the very long line of people in front of the bank ATMs. From my (European) perspective, it was inconceivable to wait more than 1 minute to withdraw cash. It took me several days before understanding what was happening: it was Viernes de Quincena.

Indeed, in most of the countries of LatAm, people received half of their monthly payment on the 15th and 30th of each month. As a result, twice a month, everybody is going straight to the ATMs to empty their bank account.  This is the only relationship they really have with their bank.

Fast forward 10 years, and nothing has changed. The same long lines in front of the ATMs, even during rainy season, even if it means waiting for an hour, however foolish the idea might seem to some of us.

Cash is King

This phenomenon is getting even clearer when you witness how people are paying things in Mexico. You want to play football ? You'll have to pay the sporting center in cash or nothing. You want to eat tacos on the street ? In cash. If you order an Uber, you can pay by credit card, but the vast majority of people are paying in cash: 70% in the city of Guadalajara for instance.

Here's even more dramatic examples: most of the people are still paying their rent by cash, no matter the risks. The default for most customers in Latin America is to order online (say on Amazon), then pay at the local convenience store (say Oxxo) in cash.

Even when you have the chance to find a business that is accepting credit card,  it is very likely they will charge you a 3% commission for it. If you are "rational" like most people, you will pay by cash.

Finally, some people are forced to use a bank account to received their payment. A lot of them use their spouse's, and they all do the same: on payday, it's a family trip to the ATMs, then a good beer because god damn I earned it.

It is not going anywhere

Let's look at the actual numbers. In LatAm, 80% of the transactions are made in cash. In Brazil, the country with the highest penetration of digital payments in LatAm, the share of cash still accounts for 67% of the transactions.

A lot of people and articles claim that, as economies around the world have shifted to digital and card payments, Latin America is poised to take a similar trajectory.

First, the number are saying otherwise. Despite sensational media coverage announcing the premature death of cash and the advent of cashless payments in Mexico, the country's cash infrastructure has expanded during the pandemic. Indeed, people could not go to the bank branch anymore, but they still needed to retrieve cash from the ATM.

Moreover, it's not because you are using a digital service that you are paying digitally. Taking the example of Amazon again, people are increasingly ordering online, yet paying offline. They check on their smartphone what movies are currently in the theaters, but they still go physically to the counter to buy the tickets.

Open Banking is not enough

The prevalence of cash in LatAm is actually the reason we started Palenca. We were previously building a lending company focused on the gig economy and had a hard time validating earnings and behavior that we needed to underwrite credit.

We tried to do it first with the bank accounts, but the information we were getting was either incomplete, messy or inexistent. Besides, many users do not want to share the bank account credentials or connect with a bank account they are actually not using.

To solve that we built integrations with gig economy platforms (e.g. Uber, DiDi, Rappi). We realized the infrastructure we built to get access to the data was way more valuable than the lending business we had before.

Plus c'est long, plus c'est bon

The point of this article is not to say that cash will always be dominant in LatAm, or that digital will not gain ground, especially after the massive behavior change we are witnessing. Cash usage will eventually decreases in LatAm, because it is so high, the only way is down.

However, I'm saying it will take a VERY long time. The distrust in banks is so high, the culture of cash so intense, the willingness to avoid tax and therefore receiving payments digitally so big, that things are moving really slowly.

The first time I came in Mexico, back in 2012, the percentage of cash transactions was at 95% . It did not plummet, but it decreased nonetheless to 86%. The emergence of the Gig Economy for example, brought a lot of people from the informal economy into the formal one. To become an Uber Driver, you need a bank account. In Mexico, if you don't own one, BBVA will gladly give it to you.

It's easier than ever to set up a bank account, and it drives up the number of digital payments a bit. Unfortunately, most of this change is not driven by the additional value that a bank account is bringing, but rather a gentle coercion. A lot of people in LatAm own a bank account not because they want to, but because they need to, to receive their salary. First chance they get, they take the cash.

I'm going to quote this article, because I could not come up with a better explanation to why this is the case:

Consumers in the region will adopt cards and other digital payment methods to the extent that they are useful in everyday life. The reality is that most merchants in Latin America are not currently able to accept digital payments due to barriers such as cost, infrastructure, informality and limited access to business bank accounts.

Right, now, the reality is that Cash is so dominant in LatAm that you don't need a bank account to live. If you don't trust me, go to any street market in Mexico, try to pay with your brand new Nubank card, and see what happens.

From 🇲🇽 with love,

Pierre

]]>
Lalamove es una empresa basada en Hong Kong de logística on-demand que conecta usuarios que necesitan hacer entregas con socios conductores con diferentes vehículos (moto, camioneta o camión) dependiendo las necesidades de los usuarios.

Encontrar trabajadores confiables es complicado y costoso

Al expandirse a nueva regiones, Lalamove requiere herramientas tecnológicas

]]>
https://blog.palenca.com/lalamove/61118e06d811ba001c68026cThu, 12 Aug 2021 18:12:09 GMT

Lalamove es una empresa basada en Hong Kong de logística on-demand que conecta usuarios que necesitan hacer entregas con socios conductores con diferentes vehículos (moto, camioneta o camión) dependiendo las necesidades de los usuarios.


Encontrar trabajadores confiables es complicado y costoso

Al expandirse a nueva regiones, Lalamove requiere herramientas tecnológicas para que puedan hacer onboarding de socios conductores rápidamente y con confianza en la calidad de los mismos, especialmente en Latinoamérica, una de las regiones con más fraude en el mundo (2x el nivel global).

Los socios conductores son la cara de Lalamove frente a sus clientes, por eso requiere trabajadores que puedan garantizar que todos sus pedidos se entreguen con la mejor calidad. Además, requieren herramientas que les ayuden a reducir el riesgo de fraude (e.g. robo de pedido). Parecen dos filtros sencillos, pero a la escala esto se vuelve mucho más complicado:

  • A solo un año de empezar sus operaciones en México, Lalamove ya cuenta con más de 10,000 socios conductores/repartidores
  • Cada mes reciben aproximadamente 3,000 aplicaciones

En Latinoamérica aproximadamente 70% de los conductores trabajan en dos o más plataformas (e.g. Uber, Rappi). Esto constituye una base muy grande de potenciales conductores con experiencia en otras plataformas para empresas entrantes. El problema es que para empresas como Lalamove que están entrando a nuevos mercados, muchos de los conductores que aplican han sido bloqueados de otras plataformas o no cumplieron los requisitos (e.g. examen de Uber). Por lo tanto, ver su desempeño histórico en otras plataformas es una excelente manera de optimizar su funnel de adquisición.

¿Qué es un buen trabajador de plataforma?

Validación de identidad, comportamiento y fraude en un solo click

Con Palenca, Lalamove puede verificar la identidad y ver el comportamiento de los conductores en otras plataformas, así agilizando el proceso de onboarding de los conductores, priorizando a los mejores. Ver su desempeño en otras plataformas es una excelente manera de filtrar a los conductores más deseados.

¿Cómo funciona?

1) El aplicante ingresa sus credenciales de otras plataformas dentro de la app de conductor de Lalamove.

Lalamove : Más allá de la verificación de antecedentes 🕵🏼‍♀️
Widget de Palenca

2) Una vez que el conductor ingresó sus credenciales, Palenca le proporciona a Lalamove información personal, datos de su vehículo, calificación en la plataforma, entre otras.

Lalamove : Más allá de la verificación de antecedentes 🕵🏼‍♀️
Lalamove : Más allá de la verificación de antecedentes 🕵🏼‍♀️

3) Una vez creada la cuenta, Palenca le hace una recomendación, basado en su métricas.

Lalamove : Más allá de la verificación de antecedentes 🕵🏼‍♀️

¿Por qué es tan útil para Lalamove?

Tradicionalmente, el proceso de onboarding de conductores implica un background check, confirmando la identidad de cada conductor con las bases de datos del gobierno y checando que estos no tengan historial criminal. Sin embargo, esta información es muy limitada, ya que no da mucho color respecto a la calidad de los conductores.

En el ejemplo pasado vimos un conductor con 3,454 viajes en Uber, 1,326 en Rappi y buena calificación en ambas plataformas. ¿Pero qué pasa cuando un chofer no es de buena calidad?.

Con el background check tradicional, no es muy fácil ver esto, pues hay muchos conductores que a pesar de no tener historial criminal, han sido malos actores en otras plataformas.

Lalamove : Más allá de la verificación de antecedentes 🕵🏼‍♀️
Lalamove : Más allá de la verificación de antecedentes 🕵🏼‍♀️

Este conductor ha sido bloqueado después de muy pocos viajes, y ha tenido un pésimo desempeño en otra, sin embargo esta información no está disponible en los background checks tradicionales.

Resultados: 80% de los aplicantes representan un riesgo

Los resultados del piloto indicaron que  sólo el 20% de los aplicaciones eran conductores confiables, el otro 80% tenían malas calificaciones en otras plataformas o corrían el riesgo de ser fraudulentos. Aplicando estos porcentajes a la cifra de aplicaciones mensuales a Lalamove, estarían rechazando cada mes a 2,400 de los conductores que aplican a su plataforma por no ser de la calidad que requieren, y por lo tanto reduciendo sus costos de adquisición y fraude.

]]>
Palenca is part of YC S21 Batch! We're honored to be joining a community of YC companies that includes Stripe, Airbnb, and Rappi.

Hi - I’m José Carlos. Together with Antoine and Pierre we co-founded Palenca, the only Payroll API for LatAm. We make it easy for companies in

]]>
https://blog.palenca.com/palenca/61092a80ee444d001cc17b91Sun, 08 Aug 2021 21:15:26 GMT

Palenca is part of YC S21 Batch! We're honored to be joining a community of YC companies that includes Stripe, Airbnb, and Rappi.


Hi - I’m José Carlos. Together with Antoine and Pierre we co-founded Palenca, the only Payroll API for LatAm. We make it easy for companies in LatAm to verify employment data and identity. Unicorns like Kavak and Lalamove, use us to run background checks and provide financial services.

Prior to Palenca, the three of us were building a lending company focused on the gig economy and had a hard time validating earnings and behavior that we needed to underwrite credit. To solve that we built integrations with gig economy platforms (e.g. Uber, DiDi, Rappi).

We realized the infrastructure we built to get access to the data was way more valuable than the lending business we had before.

PROBLEM

In emerging markets it’s extremely hard to validate income, identity and behavior as most of the worker's data is fragmented and inaccessible. As a consequence, countries like Mexico encounter poor credit penetration (20%) and high levels of fraud (2x the global level).

Moreover, 80% of the transactions in LatAm are in cash. As soon as workers are paid, they are withdrawing all the money out of the ATM to spend it in cash. This means the vast majority of financial and employee information can not be accessed through the bank accounts.

OUR SOLUTION

We integrate directly with payroll systems to provide access to any worker account via our API.

Palenca is part of Y Combinator


WHO IS IT FOR? 👀

Any company in LatAm who wants to validate earnings and identity. Some use cases include:

Financial Services 💸
- Validate borrower information through income/employment verification
- Enable direct deposit switching

Recruitment 🙎🏽‍♂️
- Verify employment for new employees easily

Vehicle Rental  🚘
- Check the employment status before renting a Car/Moto
-Continuous access to your user’s income to make sure they can pay the rent


Joining YC is an important step in our journey. During the program, we had 70% monthly revenue growth and 15k unique users registered through our API.

As of today we have 99% coverage of the Gig Economy in LatAm (workers and restaurants), we are building integrations with multinationals (Walmart), stated owned companies (Pemex) and HR Systems (Runa).

Our goal is to cover 90% of  LatAm's workforce, stay tuned 🚀

From 🇲🇽 with love,

The Palenca Team






]]>
Marco Antonio tenía miedo de pagar su segundo préstamo, porque pensaba que no le íbamos a prestar de nuevo.

Samuel ganaba tres mil pesos a la semana en promedio, pero pensaba que ganaba siete mil.

Angel Rodrigo pedía prestado cuando no necesitaba, “se quería sentir rico por una semana”.

Prestar

]]>
https://blog.palenca.com/vech-ahora-es-palenca-desfragmentando-los-datos-de-empleo-2/609826d6458b45001c54ce48Mon, 10 May 2021 21:25:23 GMTMarco Antonio tenía miedo de pagar su segundo préstamo, porque pensaba que no le íbamos a prestar de nuevo.

Samuel ganaba tres mil pesos a la semana en promedio, pero pensaba que ganaba siete mil.

Angel Rodrigo pedía prestado cuando no necesitaba, “se quería sentir rico por una semana”.Vech ahora es Palenca: Desfragmentando los datos de empleo

Prestar dinero es uno de los negocios más tradicionales y difíciles de llevar a cabo especialmente en mercados emergentes como México, en donde el fraude es el pan de cada día y el efectivo es el rey. A finales del 2018, mi co-fundador Pierre y yo dejamos nuestro empleo en Uber y decidimos lanzar Vech: una empresa enfocada en crear soluciones financieras para los trabajadores independientes. Intentamos de todo, desde préstamos personales, créditos en punto de venta y un estabilizador de ingresos.

En la industria del crédito al consumo no hay muchas barreras de entrada; cualquiera puede empezar a prestar dinero. Sin embargo, para construir una empresa que valga más de $100M + USD o incluso un unicornio se necesita tener un verdadero diferenciador en la Distribución, Riesgo, Cobranza, Fondeo y Tecnología, algo que muy pocas empresas en Latinoamérica han logrado tener.

Con base en nuestra experiencia y el performance de nuestra cartera, humildemente podemos decir que nos iba a tomar mucho tiempo construir un sólido modelo de negocios desde la distribución hasta la cobranza, un verdadero dolor de cabeza. De igual forma, tener acceso al capital para fondear los préstamos representa otro gran reto. No hay muchas opciones. Podíamos morir en cualquier momento.

En lo que sí somos los mejores es en la creación de tecnología para evaluar el riesgo de un trabajador. Lo que hicimos fue crear integraciones con cada una de las plataformas de gig economy para comprobar ingresos, validar identidad y tener acceso a métricas en tiempo real. Lo que no sabíamos es que en realidad estábamos resolviendo un problema aún más grande que el del acceso a crédito.

La mayoría de las startups hablan acerca de crear un score utilizando datos alternativos (e.g. teléfono, transacciones bancarias, SMS, redes sociales) para evaluar la intención de pago o, inclusive, de crear un historial por medio de préstamos pequeños. Sin embargo, el mayor reto para las instituciones financieras es responder a la siguiente pregunta: ¿Cuál es la capacidad de pago de mi cliente?

Las opciones existentes como el open banking y el buró de crédito responden parcialmente esta pregunta. En el caso de los trabajadores de plataforma encontramos que, en promedio, 50% de sus ingresos es en efectivo, lo cual no está visible en su cuenta bancaria. Además, 70% trabaja en 2 o más aplicaciones y, aunado a todo esto, la mayoría de ellos no tiene historial crediticio o, si lo tiene, muy probablemente tenga un puntaje muy bajo.

Por tanto, la única manera de determinar la capacidad de pago de un trabajador es mirar directamente a los datos de la plataforma o sistema de nómina, para los cuales no existe acceso. Es ahí cuando nos dimos cuenta que la infraestructura que habíamos creado para prestar en Vech era mucho más valiosa que cualquier producto que hubiéramos creado para el consumidor.

Por estas razones, pivotamos a Palenca, una API de nómina. Conectamos a empresas con cuentas de trabajadores (e.g. Uber, DiDi, Walmart, Pemex), para validar datos de empleo e identidad. De esta manera, los trabajadores pueden aplicar a un crédito, un trabajo o cotizar un seguro en un solo click.

Por ejemplo, una fintech puede integrar a Palenca en su app, para ofrecer préstamos a conductores de plataforma de la siguiente manera:

  1. El usuario se conecta con las plataformas en las que trabaja proporcionando sus credenciales
  2. Con el consentimiento del usuario, Palenca se conecta a la base de datos de las plataformas para agregar y estandarizar la información
  3. La empresa recibe la siguiente información del trabajador por plataforma para aceptar o rechazar un solicitud:

    a) Información Personal (e.g. Nombre, Apellido, Foto, RFC)
    b) Perfil (e.g. Calificación en la plataforma, Nivel, Número de Viajes)
    c) Ganancias históricas y en tiempo real
Vech ahora es Palenca: Desfragmentando los datos de empleo
Te invito a probar nuestro widget en el siguiente link 

Así como hay plataformas digitales, existen sistemas de nómina que albergan datos de millones de trabajadores. Sin embargo, estos sistemas están fragmentados y cerrados. En nuestra visión se encuentra democratizar el acceso a los datos de empleo para el 90% de los trabajadores formales en Latinoamérica, pero este punto lo tocaré en otra ocasión.

]]>