Neon acquires MEI Fácil to boost services for Brazilian micro-entrepreneurs

Contxto – While Nubank attracts loads of attention, other Brazilian fintechs sometimes fly under the radar. That’s no longer the case with Neon that recently acquired fellow financial technology startup, MEI Fácil. 

Following this development, Neon will inherit MEI Fácil’s portfolio. With it, the fintech will incorporate new features into the application while focusing more on micro-entrepreneurs. 

Overseeing this partnership was a common investor between the two parties, Yellow Ventures. Although the price tag of the acquisition wasn’t disclosed, Estadão reported that initial MEI Fácil investors received cash payments. All the while, founders reportedly earned Neon shares. 

Fintech services for micro-entrepreneurs  

Historically, MEI Fácil provided a platform designed to support entrepreneurs on the micro-level. After all, the “MEI” stands for “individual micro-entrepreneur” based on the Portugues acronym.

Solutions ranged from accounting services, online management, card reading machines, as well as CNPJ generation. Short for the National Registry of Legal Entities from Portugues, Brazilian companies obtain 14-digit CNPJ numbers to operate.

Moving forward, all of these features will now be available through Neon Pagamentos’ platform. Former MEI Fácil customers will have access to these services over the app. 

Last year was when Neon really started paying more attention to SMEs. As part of the fintech’s business model, it doesn’t charge any debit card or annuity fees for digital “Neon Pejota” accounts. 

Based on the low risks and competitive rates, Neon Pejota has particularly promoted this financial product to Brazilian companies and startups. Some of the only charges that Leon enforces are transfers from the digital account to a banking institute for R$3.50 (approximately US$0.86) and ticket issuance for R$2.90. 

Legal issues

When Neon began on July 11, 2016, it was a joint-venture between a startup for prepaid cards ControlY and Banco Pottencial. Based on this commercial partnership, Banco Pottencial later became “Banco Neon SA” and ControlY became “Neon Payments SA.”

Keeping this in mind, what we know as Neon today certainly went through some challenges when the Brazilian central bank temporarily suspended its operations. This occurred in 2018 when authorities liquidated Banco Neon that managed checking accounts.

Reasons behind Banco Neon’s liquidation allegedly fell under financial irregularities. These included “grave violations of legal and regulatory norms” as well as a “compromised financial situation.” 

During this time, Neon Payments couldn’t open new digital accounts since it depended on Banco Neon’s infrastructure for financial transactions. Transfers, payments and credit card functions were also affected. All the while, users still had account balances available for withdrawals or debit card purchases.

Around the same time, Neon Payments raised one of the most valuable Series A investment rounds in Brazil’s history, US$22 million to be exact. In a strange twist of events, the small firm wrapped up raising this substantial amount of money a day before Brazil’s central bank temporarily discontinued the business. 

Investors included Propel Venture Partners, monashees, Omidyar Network, among others. Funds went towards accomplishing its goal of growing the customer base from 600,000 clients to 1 million. 

Three days after this whole ordeal, Neon Payments created a new arrangement and transferred all accounts to its new partner, Banco Votorantim. Simply known as “Neon” nowadays, legal troubles have simmered down ever since.

Recent updates

Another interesting initiative that Neon has started is allowing São Paulo bus commuters to use their Neon-issued credit cards to purchase fares. While only available in certain areas, much of this is due to mobile NFC technology, meaning near-field communication. 

As a communication protocol, it allows two electronic devices to connect to one another. In this case, a smartphone and a bus payment terminal. Passengers simply need to tap the device with their Neon credit card, and voila. You’re good to go.

-JA