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How Palla Financial Cracked Cross-Border Payments by Inverting the Distribution Model

The cross-border payments graveyard is littered with well-funded corpses. Billions in venture capital, armies of smart engineers, and yet the fundamental economics remain brutal. In a recent episode of BUILDERS, Enrique Perezalonso, CEO of Palla Financial, explained why attacking this market head-on is a death sentence—and how his team found an asymmetric wedge by flipping who initiates the transaction.

“It is a complicated problem because you’re talking about a very regulated industry in the sense that you have regulations on the sender side, you have regulations on the receiving side,” Enrique explains. “And you also have a transaction that two people. It takes two people to complete it. So putting that together in two different countries and trying to make it as a good experience as you can, it’s difficult.”

The Distribution Cost Problem Nobody Talks About

Before building anything, Enrique dissected why Western Union’s margins looked unimpressive despite charging fees that seemed extractive. The answer reshaped Palla’s entire strategy.

“Initially most transactions didn’t have like a digital distribution,” Enrique notes. “They weren’t connected to the banking payment rails. So mostly cash based, both going in and going out. So if you’re doing cash, you need the distribution. So then you’re adding layers upon layers of people who are actually helping you move the money.”

The operational reality: someone takes the cash, reports it into the system, coordinates with the receiving point of sale, ensures cash availability, and manages the actual cash logistics. “Even the cash management is pretty expensive,” he adds.

This wasn’t a technology problem—it was an infrastructure cost problem. And it meant that as digital rails matured, the entire cost structure could collapse. But only if you could avoid replicating the expensive parts.

Why Sender Acquisition Is a Trap

When Palla launched, they had a clear initial thesis: build a better consumer experience for international P2P payments. Then they ran the CAC math on the largest corridors.

“One of the things we didn’t want to do is go in and spend tons and tons of money on customer acquisition because more likely these guys, like the big players, they have it really honed in,” Enrique explains. “So it’s going to be very difficult for us to find those kind of avenues or those channels to find cheap kind of customer acquisition.”

The US-to-Mexico and US-to-India corridors were already hyper-optimized. Established players had spent years testing channels, refining conversion funnels, and building brand recognition. A new entrant would need massive capital just to achieve parity—let alone gain market share.

So Enrique asked: what if we attack the other side?

The Recipient-Side Wedge

Latin America represents over $160 billion annually in remittances from the US—the world’s largest corridor. Instead of competing for US senders, Palla went to banks and financial institutions on the recipient side.

“We said, listen, all these banks, they want to participate in the remittance in the international payments space. They want to receive those funds because it’s additional deposits for them, and that’s downstream revenue. They get to participate in the fees.”

The pitch was straightforward: Palla would embed their product directly into the bank’s digital channels. Recipients could request funds from US-based senders through the bank’s app. The sender receives an invite to a white-labeled web experience—no app download, just a quick checkout flow funded via card.

“In the US we’re not going to have you download a new app or anything. We have a web app, which is a white label with your family member’s bank’s name. And all you’re going to do is just enter your information onboard something really quick. It’s kind of like a checkout, and it’s going to take you a couple seconds.”

The transaction settles in real-time. The bank gains deposits, earns interchange from card transactions, and differentiates their digital offering—all without building or maintaining infrastructure.

The Revenue Split That Makes It Work

The business model required aligning incentives across three parties: sender, recipient bank, and Palla.

“The consumer, the one who’s sending the money, they typically pay a fee, $3. And then we might take a small markup on the FX,” Enrique explains. “And then what we do is we share part of that with the recipient banks. They’re getting also some interchange because we’re moving money through the card rails.”

The economics work because digital distribution eliminates the expensive cash handling infrastructure. The sender pays less than cash alternatives. The bank earns revenue without capital investment. And Palla captures margin while avoiding direct customer acquisition costs.

When Banks Try to Build (And Fail)

One early prospect spent nine months evaluating Palla before making their decision.

“Finally they come up to us and they said, you know what, Enrique, we’re going to do it ourselves. You know, we think this is pretty simple. We have everything. We’re a big group. We have the resources.”

Four years later: “They’re knocking on our door and hey, they’re like, hey, Enrique, you still available?”

This pattern became predictable. “Anyone can do anything with the right amount of capital and talent,” Enrique notes. “But the reality is if you’re in a bank, if you’re in a financial institution, you’re going to have so many other competing priorities. And really, you also need the scale to make this business work because it is a volume business.”

The insight: target buyers who’ve already attempted internal builds. They understand the problem depth, won’t need education on the value proposition, and have experienced firsthand why partnership makes strategic sense.

The Hidden CAC in Embedded Models

Palla’s early assumption: embedded distribution means minimal customer acquisition costs. Banks handle the marketing, Palla provides the infrastructure, and transactions flow naturally.

Reality hit hard.

“Initially we used to be very soft touch where we would just give our partners hey, maybe a best practice guide and we would coach them,” Enrique admits. “But more and more we are becoming more and more hands on. So a little bit like consultancy.”

The realization: “There’s no such thing as no CAC. You still have to invest and you still have to make sure the incentives are correct and you have the right incentives to achieve your goals because it is cheaper to acquire customers this way 100%. But it’s also, you’re doing so in an indirect way.”

Today, Palla functions more like an implementation consultancy. They help partners design internal incentive structures, establish accountability frameworks, and drive adoption through their existing customer base. The CAC is lower than direct acquisition, but requires substantial investment in partner success resources.

“We’ve learned from failures, we’ve learned from customers where partners where we thought they were going to be performing really well and they never did take off. And thanks to that we’re doing better and doing better implementations.”

Rebuilding the Product Three Times

The product Palla ships today bears almost no resemblance to their original build.

“The product that we have now is not the product we had in mind when we started, and it’s not the product we started building when we started going to market. But we listen to our customers and they will tell you what they want, they will tell you what they need.”

This wasn’t iteration—it was wholesale reconstruction based on what banks actually needed versus what Palla initially imagined. “Most of our features, most of our products, they’re still like, you know, we go hand in hand with our partners.”

The competitive advantage wasn’t product vision—it was execution speed. “You have the advantage of being nimble, of being fast, of not having bureaucracy. So go build what they’re asking for and make them happy. And no other company, no large company is going to be able to do what you’re doing because you have the advantage of speed and you have the advantage of wanting, of having that hunger to make it work.”

The Discipline That Creates the Moat

As Palla gained traction and competitors began copying their embedded approach, adjacent opportunities multiplied. Cross-sell into other financial products. Expand into different payment types. Build complementary services.

They said no to everything.

“We have two or three products, they’re all cross border and we are laser focused on it, on making the experience better, on making it work, making it faster, making it cheaper,” Enrique says. “It’s very hard for a company that has so many other competing priorities to really be able to compete with that.”

He’s explicit about the tension: “There’s always opportunities to do other things and to try and cross sell and to try and do other things. But in my opinion the best thing we’ve done is keep focused on what we do, which is international payments.”

The discipline isn’t about focus during the struggling phase—it’s about maintaining focus when success creates endless plausible expansions. Each adjacent opportunity looks rational in isolation. Collectively, they destroy the core advantage.

From Recipient Pull to Sender Push

While 95% of Palla’s sales happen in Latin America, they’re beginning to expand into US-based distribution partners for sender-initiated transactions.

“We see more and more the necessity for companies, for even financial institutions and other big distributors that have big customer bases that need to do payouts into Latin America or other parts of the world,” Enrique explains. “So we’re starting to see it more and more.”

But the expansion follows the same playbook: embed with distribution partners who have existing customer bases, avoid direct customer acquisition, and maintain focus on cross-border payment infrastructure.

The Network Vision

Enrique’s long-term vision positions Palla as a global network of financial institutions enabling frictionless cross-border payments.

“What we’re trying to do is create this network of financial institutions where you can send money from anywhere to anywhere, and you can do it in real time, and you can do it in a way that’s super simple. You’re almost sending money like if you’re sending a Zelle transaction.”

The vision is ambitious but grounded in the discipline that’s worked: build dense coverage in a single corridor, prove the economics, extend the model to adjacent corridors, and maintain extreme focus on the core infrastructure while competitors chase tangential opportunities.

Cross-border payments may never be fully “solved”—but by inverting who initiates transactions, investing heavily in partner success, and maintaining ruthless focus, Palla found an asymmetric wedge into one of fintech’s most challenging markets.