EFEX, a Mexico-based cross-border payments platform, has raised $8 million in seed funding led by PayPal Ventures. The company offers an API and platform for businesses to open US and Mexico business accounts with a single legal entity, collect payments in local currency across 31 countries in 12 currencies, and send transfers to over 140 countries 24/7 with competitive rates. The capital will expand its infrastructure, enhance API features, and grow its customer base among LatAm SMEs and fintechs.
LatAm Payments Momentum Builds
The timing aligns with surging demand for efficient US-Mexico corridor solutions amid nearshoring. Recent activity includes Pomelo's $60M Series B in March 2024 for cross-border embedded finance, while the broader LatAm fintech sector saw $2.4B in funding H1 2024. EFEX's local collections feature differentiates by enabling fee-free inbound payments in local currencies.
Nearshoring Strains Legacy Payments
US-Mexico goods trade reached $798 billion in 2023, up 5.5% year-over-year, fueling demand from import/export firms and e-commerce. Yet LatAm businesses endure 3-7% FX fees, multi-day settlements, and regulatory hurdles for cross-border accounts. Traditional wires and banks lack API speed and local receipt capabilities, eroding margins for SMEs expanding globally.
API Platform Enables Local Collections
EFEX built a full-stack solution: 24/7 transfers via direct central bank links, no-cost bulk payouts, rate-locking forwards up to 365 days, and its new Receive Transfers in Local Currency across 31 countries. This allows marketplaces like Mercado Libre partners to collect pesos or reais without FX hits. Compared to payout-heavy rivals like Airwallex or EBANX, EFEX prioritizes inbound for LatAm-US flows.
As PayPal Ventures explained in their investment thesis:
"EFEX is powering the next generation of cash management for ambitious LatAm companies scaling across borders with real-time, low-cost infrastructure."
PayPal-Led Round Brings Expertise
PayPal Ventures led, with participation from Nido Ventures, 500 Global, Franklin Templeton, NFX, and Bridge. PayPal adds payments rails know-how, while 500 Global and NFX provide LatAm and fintech scaling insights. This mix signals strategic validation for EFEX's embedded API play over pure payout processors.
Cross-Border Opportunity Explodes
Global cross-border payments volume hit $150 trillion in 2022, projected to grow 3-6% annually through 2028. LatAm fintech funding rebounded to $2.4B in H1 2024 after a 2023 dip, with cross-border specialists attracting outsized interest. EFEX, with US Money Transmitter and Mexico CNBV licenses, plus customers like Konfio and Kushki, is primed for the fragmented market shifting toward API-native collections.