This post is also available in: Español (Spanish)
Contxto – In today’s world, living paycheck to paycheck can sure be stressful, especially in Latin America where most receive their earnings every two weeks. This is where fintechs such as MiCheque come into the picture.
Making its second appearance at Contxto is the Uruguayan fintech, MiCheque. Proceeding its debut from the Montevideo fintech market map, now the company is making headlines for its recent investment round of US$500,000 via convertible notes among over 50 undisclosed investors.
“They are mostly people who were registered on the platform with the idea of buying checks, or who listened to Rodrigo Álvarez’s podcast about us,” said Milton Rodríguez, co-founder and CEO of MiCheque, in recent correspondence.
Early payroll service
Being its second series, the fintech will allocate capital in two ways in hopes of strategically scaling. Firstly, 60 percent will go towards marketing and sales to boost its commercial presence in Uruguay.
Today the platform is only reaching 1 percent of the eligible market in its native Uruguay, according to Rodríguez. All the while, this is where over US$900 million worth of deferred checks are issued every month.
According to the CEO, much of this has to do with distribution.
“While we have a large demand, reaching the offering is not easy,” said Rodríguez. “Investors are actively seeking where they can generate profitability, while SMEs require you to show up, explain and convince them that it is the best option.”
Along those lines, about 40 percent of partnering companies learn about MiCheque through word of mouth. Due to this, much of the expenditure will go towards devising a referral program. This way, users who recommend MiCheque’s services will be awarded.
“This will focus on exploiting the referral system,” added Rodríguez. “We still haven’t solidified all of the details.”
Based on my correspondence with Rodríguez, though, CEO and founder of Tink Alexander Thais will collaborate with MiCheque to launch this new service. Within the startup ecosystem, Thais has reportedly won various awards for his referral-as-a service.
Secondly, another 40 percent will go towards developing its invoicing technology by the end of the year. Since its 2016 founding, MiCheques has grown by 400 percent year after year, all while overseeing an average of 700 monthly transactions.
Regarding the business model, MiCheque has created a system for early payroll services, specifically used among SMEs and their employees. Under this arrangement, workers at partnering companies can sell checks to individual investors over the peer-to-peer platform.
In turn, employees can receive early funds rather than waiting for payday to come around. This money goes directly to the user’s bank account. All the while, MiCheque earns a 24 percent commission from investors for every sold check.
Ever since 2016, MiCheque has assisted over 6,000 users while selling more than 5,500 checks exceeding US$21 million. Combining software and finances, it has gained a positive reputation for helping partners that lack credit opportunities but aspire to reach financial solvency.
This is especially true for SMEs that generate over 90 percent of employment in Uruguay, as noted on MiCheque’s Facebook. Also according to Rodríguez, around 95 percent of Uruguayan companies experience systematic challenges in terms of financing.
“SMEs in Uruguay experiences difficulties in terms of accessing loans,” said Rodríguez. “Either because the rates are very high or because (institutes) reject their applications.”
Instead of resorting to high-risk loans, MiCheque certainly seems to be providing a more reliable solution for SME partners.