Paying It Forward
In 2007, a group of entrepreneurs in South Florida saw an opportunity: create an electronic system to pay airlines, trains, ports, and others, so shippers could get freight released quickly and safely.
Fast forward to June 2021, when Coral Gables-based PayCargo received a $125 million investment from private equity firm Insight Partners to expand its payments business beyond North America and Europe. That’s on top of a $35 million funding round led by Insight Partners last year. “The incredible growth PayCargo has experienced since our initial investment is testament to the confidence the industry has in their platform,” says Ryan Hinkle, managing director of the New York-based private equity firm.
PayCargo roughly doubled business in 2020, processing more than $4 billion in payments, taking in $45 million in revenue, and boosting staff worldwide to roughly 65. It had doubled business in 2019, too. “And we’re on course to do it again this year,” says CEO Eduardo Del Riego. Today, PayCargo works with more than 67,000 users, from air and sea carriers to warehouses. With its new funding, it aims to expand in Europe and enter Asia this year, followed by the Middle East, Africa and Latin America.
Growth potential remains enormous because international trade relies mostly on paper-based payments such as checks, cash, and vouchers. Even in PayCargo’s strongest market, North America, “we handle less than four percent of the payments in logistics,” says Del Riego. “Our biggest challenge is education – getting out to the street and letting everyone know the benefits of electronic payment systems and quick release of cargo. Inertia is the most difficult thing to overcome.”
Born in Cuba and flown to the U.S. under the Pedro Pan airlift for children, Del Riego began in the cargo industry after high school in 1974. By age 21, he’d already run a division for a ship line. He worked with shipping companies mainly in Florida, Alabama and Puerto Rico, eventually selecting their software. He then started his own tech firm, Athena Information Systems, which he sold before joining PayCargo in 2013, when it had only 100 users.
Key to growth is neutrality, says Del Riego; PayCargo links to users’ existing software and management systems through a patented process. Its click- ship-pay tool not only speeds payments but also reconciles bills, transactions and refunds at a lower price than earlier systems, he says. Shippers pay a per transaction fee of $5 to $9.50, depending on volume.
Coronavirus also sped adoption. Many merchants no longer wanted to handle paper that might pose a health risk, says Del Riego. Investors reached out too. Del Riego says his team opted to work with Insight Partners for its experience with tech startups and tools such as artificial intelligence.
PayCargo set up headquarters in Coral Gables in 2009, lured partly by the city’s central location and proximity to Miami International Airport – though rent and parking cost more than other areas. “If we hadn’t had the right financial backing, we would have thought twice as a startup about being in the Gables,” Del Riego concedes. But the restaurants, services and safety were too alluring. “It’s a benefit when you finish at three a.m. to be in a peaceful, prosperous area,” he says. Now the Gables staff could double, Del Riego says, from roughly 50 today to 100 by 2023.