Mexico’s DolarApp Raises US$5 Million To Enable Banking With Digital Dollars

A year after its founding, DolarApp raised a US$5 million seed round led by Kaszek Ventures and accelerator Y Combinator, where they participated in its summer 2021 batch. In addition, 50 angel investors participated. 

DolarApp was founded in the US by former Revolt neobank employees Zach Garman, Álvaro Correa, and Fernando Terrés, but it has a subsidiary in Mexico, the first Latin American country where it will start operating.

Although they plan to reach different countries, their first step is Mexico because the founders saw the problem there was in the country to access banking in dollars. With DolarApp, they are providing access to the purchase and sale of USD Coin (USDC), a stable cryptocurrency linked to the dollar, also known as a stablecoin, which can be exchanged for US$1.00.

From Mexican pesos to dollars with DolarApp.

DolarApp allows creating a USDC bank account in a few seconds. This will allow people to save in USDC with annual earnings of up to 3% and make international purchases through a Mastercard with up to 4% cashback. 

In addition, users will be able to send and receive money in the US for a flat fee of US$3, which is lower than what other companies charge (US$3 plus a 2% fee). The company’s CEO, Fernando Terrés, told TechCrunch that they make money from the flat rate and from the revenue from balances.

In a press release, he noted that remittances between the US and Mexico accounted for US$50 billion in 2021 and that their fees reached 5% of the total amount sent on average.

“DolarApp allows Latin Americans to manage their finances in USDC, protecting their savings in a stable currency and without the costly bank fees associated with international bank transfers and card payments, all in a single account,” Hernán Kazah of Kaszek Ventures said in the statement.

The fintech has been operating in beta phase for a few months. With the new capital, it will seek to expand its team of 11 people and its marketing area and prepare its official launch. DolarApp will also launch its virtual payments with Apple Pay and Google Pay.

Main image: Zach Garman, Álvaro Correa, and Fernando Terrés, founders of DolarApp (Photo: DolarApp).

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