Matera raises $100 million from Warburg Pincus to help the US catch up to Brazil in instant payments

To say that Pix, the instant payment system created by the Central Bank of Brazil, has been a resounding success is an understatement. Pix facilitates direct money transfers between the core banking systems of different financial institutions, allowing Brazilians to pay even street vendors using their mobile wallets. As of earlier this year, Pix was estimated to be used by around 153 million Brazilians, approximately 75% of the population, and 15 million companies.

The widespread adoption of Pix has naturally driven growth for companies providing the supporting technology. Matera, a Brazilian company, exemplifies this trend by offering instant payment, QR code payment, and core banking software to financial institutions. Matera’s software enables banks and licensed payment institutions to send and receive Pix transactions, assign aliases, generate QR codes, and perform other functions within the Pix environment. As Pix transactions increasingly replace credit card transactions, major payment networks lose market share, while companies like Matera gain it.

Introduced in 2020, Pix has significantly fueled Matera’s growth. Since then, Matera has quadrupled its size, achieving a 30% revenue increase, reaching $77 million in 2023. It is rare for a company founded in 1987 to experience such rapid growth so many years after its inception. Today, Matera is announcing that it has received a $100 million investment from Warburg Pincus, giving the private equity firm a minority stake in the company.

Matera, similar to core banking vendors in the U.S. such as FIS, Fiserv, and Jack & Henry, is now looking to expand into North America. However, it is not offering its core banking solution in North American markets due to the presence of established incumbents. Instead, Matera is focusing on digital twin and QR code payment solutions. These solutions aim to build a more nimble operating model for financial institutions by enhancing, rather than replacing, existing core banking systems. Matera’s CEO and co-founder Carlos Netto hopes to help the U.S. catch up to Brazil in terms of instant payments, while also reducing the complexity of legacy systems.

Matera chose to partner with Warburg Pincus to gain access to the U.S. market and navigate its complexities. The U.S. government’s instant payment system, FedNow Service, which went live about a year ago, has been slow to gain traction. Matera, on the other hand, processes close to 500 million Pix transactions per month, a number expected to reach 1 billion per month with a recently signed deal. The company has around 280 clients, including two of the three top global banks, three of the ten top U.S. banks, and one-third of all banks in Brazil. Matera’s subscription-based model has been in place since its inception, with fees generally variable based on volumes such as the number of accounts, Pix transactions, and loan contracts.

Currently, Matera employs 1,100 people, up from about 900 a year ago. Henrique Muramoto, managing director of Warburg Pincus, highlighted Matera’s prominence, stating that his firm has been tracking Matera since Pix emerged in Brazil. He praised Brazil's advanced payments infrastructure and Matera's leading role within it, emphasizing that Brazil leads the way as a pioneer country in having an advanced payments infrastructure, and within Brazil, Matera has been at the forefront as the leading provider of solutions to operate in such infrastructure.