In a significant stride towards enhancing its global presence, the Uruguayan fintech company dLocal has recently been granted a payment institution license by the Financial Conduct Authority (FCA) in the United Kingdom. This regulatory approval is expected to facilitate the onboarding of U.K. merchants, marking a notable expansion in dLocal’s operational capabilities and strategic market focus. The move reflects the company’s continuous journey to bolster its position as a leader in cross-border payments, particularly in emerging markets.
Securing this license from the FCA is a pivotal milestone for dLocal as it prepares to tap into the lucrative U.K. market. The company plans to onboard local merchants through its subsidiary, Larstal Limited, which operates in the U.K. under the name AstroPay. Prior to obtaining this license, restrictions imposed on the subsidiary following the U.K.’s exit from the European Union limited its ability to engage local clients. Now, with regulatory hurdles effectively cleared, dLocal aims to capitalize on the growing demand for efficient payment solutions among U.K. businesses.
Pedro Arnt, the CEO of dLocal, emphasizes the firm’s unique value proposition that distinguishes it from established payment providers like Worldpay and Checkout.com. Unlike its domestic competitors, dLocal is specifically tailored to serve customers focused on high-growth regions such as Latin America, Africa, and Asia. Arnt highlights how this geographical focus positions dLocal as an attractive partner for global merchants that hold a vested interest in these burgeoning markets. The U.K. has emerged as a strategic hub for numerous multinational corporations, particularly those seeking to explore opportunities in emerging economies.
Since its inception in 2016, dLocal has made a significant mark in the realm of cross-border payments, particularly across Latin American countries including Brazil, Mexico, and Colombia. The new payment license will undoubtedly enhance the company’s capability to increase its workforce and bolster its operations in the U.K. market, aligning with its long-term growth strategies. With a global workforce of over 1,000 employees, dLocal is not merely establishing a presence but also integrating key executives, including its Chief Operating Officer and Chief Revenue Officer, into the London operations.
Acquiring a payment institution license provides dLocal a significant edge as it positions itself as a “licensed partner” equipped to cater to the complex regulatory environments prevalent in emerging markets. This recognition could greatly enhance trust among potential clients, particularly in developed markets where companies are often cautious about outsourcing their payment processes due to regulatory concerns. However, the company will also face formidable competition from well-established players within the U.K.’s fintech ecosystem—competitors such as PayPal, Stripe, and Adyen have already entrenched themselves in the market, presenting challenges for newcomers.
dLocal’s public listing on the Nasdaq in 2021 marked a significant valuation of $9 billion, although its market capitalization has seen a decline, recently dropping to $3.4 billion. Interestingly, despite this decrease, the company’s stock has surged approximately 40% over the past six months, indicating positive market sentiment. While speculations surrounding a potential sale of the company have surfaced, Arnt remains firm on the position that dLocal is not currently on the market. He acknowledges the speculation as part of the public company experience but reiterates that the firm remains focused on its expansion and growth strategies.
As dLocal steps into this new phase of growth within the U.K. market, the company is poised to leverage its unique insights and competencies derived from its primary focus on emerging markets. The addition of the U.K. payment institution license not only marks a significant regulatory achievement but also positions the company to play a crucial role in shaping the future of payments in the region. With a steady eye on its mission to bridge payment gaps in emerging economies, dLocal is on a promising trajectory that could redefine its presence in both developed and developing markets.
DLocal’s journey exemplifies the dynamic nature of the fintech sector, where global aspirations meet localized needs, paving the way for innovative payment solutions that cater to diverse markets around the globe.