Neon

Brazil-based Neon is a digital bank serving retail and micro-entrepreneur individuals (MEI). The bank serves its retail customers through its mobile app, which provides access to a digital account, credit and debit card, and a digital wallet. In addition, customers will be able to conduct PIX payments, an account-to-account payment mechanism created by the Central Bank of Brazil. The bank also offers investment products, where customers can either save in fixed amounts or through daily or monthly installments. Neon Bank does not charge any annual fees on its credit cards and allows its customers to make unlimited payments and transfers for free as well. It also provides personal and payroll loans facilities, and customers are also eligible for three free ATM withdrawals per month. Moreover, Neon had plans to venture into new verticals such as insurance and other credit alternatives such as loans and guarantees in the future.

Neon serves its micro-entrepreneur customers through its mobile MEI Fácil app and helps them obtain a CNPJ (tax registration number). MEI is a regulation by the Central Bank of Brazil that allows micro-entrepreneurs to pay fewer taxes and enjoy other benefits. To be eligible to open the account, a micro-entrepreneur’s annual revenue is required to be below BRL 81,000, it should employ at least one worker, and it should be engaged in a permitted activity. Through the MEI Fácil account, Neon’s customers can order a POS machine (costing BRL 78 with no monthly fees), which is linked to the digital account allowing customers to track sales, accept PIX and card payments, and issue invoices. Businesses are also given a debt and credit card with a limit of BRL 15,000 with no monthly fees. Customers can also use the app to pay bills and monthly taxes, and conduct one free withdrawal (ATM or outside bank transfer) per month, with additional withdrawals costing BRL 6.90 per transaction. In addition, Neon provides accounting services (BRL 69.90 per year) and educational content to its micro-entrepreneurs.

Neon’s rapid expansion can be attributed to a series of strategic acquisitions made in recent years. In September 2019, it made its first acquisition–MEI Fácil, expanding its services to micro-entrepreneurs. Furthermore, it expanded its product offerings to private payroll loans in November 2020 with the acquisition of ConsigaMais+, which had more than 430,000 customers and a loan portfolio worth BRL 150 million (USD 28 million). To further consolidate its foothold in the payroll loan segment, it acquired Biorc in January 2022, and the bank claimed it is the largest payroll loan provider in Brazil as of May 2022.

Key customers and partnerships

As of June 2022, Neon had ~15 million customers, consisting primarily of retail customers (~70%). Its debit and credit cards are provided in partnership with Visa.

Funding and financials

In February 2022, Neon raised USD 300 million from a Series D funding at a valuation of USD 1.6 billion from existing investor Banco BBVA, through its VC fund–Propel, thereby increasing its stake to 29.7%. Neon was expected to use the fresh capital to launch new products and improve its technological and marketing capabilities.

In FY2021, Neon reported a financial income of BRL 152.5 million (USD 28.3 million), net financial operating profit of BRL 5.7 million (USD 1.1 million), and a net loss of BRL 542.2 million (USD 100.6 million).