TAG democratizes access to finance for Brazilian SMEs with MongoDB Atlas

INTRODUCTION

Transforming financial services for SMEs

The Brazilian government has identified an opportunity to boost the economy: enable the negotiation of credit card receivables so that companies can access cheaper loans.

Starting from Brazil’s Central Bank’s initiative through Circular Letter nº 3.952 and Resolution nº 4.734 of the National Monetary Council, regulation was established for creation of a registry of payment receivables. The new regulation was enacted on June 7th 2021 and determined important modifications to credit operations. The main goal was to provide more freedom to companies to negotiate their credit card receivables, in addition to assuring transparency to creditors. This new set of norms enabled the creation of a new entity in the financial ecosystem: The Receivables Registrars.

To operate in this new model, Brazil’s Central Bank authorized four companies to build the infrastructure to store and process payment receivables in the cloud and provide data that will attest to creditors the financial health of companies.

TAG, a subsidiary of technology solutions provider StoneCo, was one of the four companies authorized. Under a tight schedule and strict performance and availability SLAs, TAG developed their solution on MongoDB Atlas, enabling companies to register pending credit card transactions. The day it launched the platform seamlessly processed 20% of the country’s credit card receivables. More than one year after launch, the pioneering solution is processing millions of requests per day. The result is a reinvigorated commercial sector, with millions of small business owners enjoying faster access to critical investments for their businesses.

THE CHALLENGE

Processing data from millions of retailers

SMEs play a vital role in the Brazilian economy. The sector covers more than 56 million jobs and was responsible for 72% of all jobs created in the first half of 2022. It is, however, not without its challenges.

The Central Bank of Brazil recognized an opportunity to rethink access to financing for SMEs. By changing the rules governing how SMEs access loans, it could provide an additional boost to the national economy.

Previously, if an SME had taken out a loan with one financial institution, the company was unable to apply for a second loan from a different lender, locking them into dealing with one company even if there were better deals with lower interest rates on the market. They could also only use banked finance as collateral, which didn’t include pending credit card payments – amounts that could comprise a significant percentage of the companies’ future revenues.

To make it easier for SMEs to apply for loans, the Central Bank launched an initiative to create a central registry of credit card receivables — i.e. pending transactions — to create better visibility of the company’s true cash flow. In addition, it wanted to speed up credit card processing times from months to days to ensure merchants receive any money owed to them faster.

In 2019, TAG was one of four companies authorized to act as a registrar, and to develop a solution to support a massive workload of 20% share of credit card receivables data by a fixed deadline. The registrars act as an intermediary between merchants and credit institutions, receiving payment data with permission from the merchant and making accurate reports available to the lender.

“Under the new model, SMEs can use their future credit card receivables as guarantees for their loans, which makes finance more accessible and democratic,” explains Felippe Ferreira, Head of Infrastructure, TAG. “Our role was to create a cloud-based credit card receivables registration platform capable of processing huge volumes of data from multiple sources, ensuring enterprise level security in line with the Central Bank’s strict requirements.”

As well as making financing more accessible, registrars are responsible for ensuring SMEs don’t use the same receivables to take out multiple loans, protecting both sides from getting into financial difficulties in the future.

With its very existence at stake, TAG needed a highly available platform that could process data from up to 1 million retailers in a short amount of time. The platform would also need to scale in line with demand during peak times, and provide rich analytics to track performance and enable ongoing optimization.

THE SOLUTION

Scalable and optimized database services

TAG selected Google Cloud Platform to implement their MongoDB Atlas—a modern, multi-cloud database platform—environments that allow for high availability, scalability, and security.

“The MongoDB team supported us from day one. In addition to offering high performance, flexibility, and multi-cloud capabilities, MongoDB Atlas brings great functionality such as diagnostic tools and infrastructure abstraction capabilities,” comments Ygor Moretti, TAG’s Head of Cloud Services. “That enables my team to quickly identify and resolve any issues, and to ensure that data is always accessible, meaning we have more time to focus on more strategic activities.”

For example, the team uses Atlas Performance Advisor to automatically monitor queries that are considered slow and suggest new indexes to improve query performance. “The dashboard is really useful for scaling storage up or down. It automatically suggests how we can optimize the environment based on which resources are heavily- or under-used,” says Ferreira. “It’s also really easy to perform backups and point-in-time restores.”

Working with infrastructure as code means the team has the agility to create and deploy cloud databases in seconds, while the platform’s unified query API makes it simple to automate processes, perform real-time analytics, and build a range of application services on the same data architecture.

The platform also supports ACID transactions, which are particularly valuable for financial transactions to ensure that if an operation is interrupted, funds aren’t partially altered or lost. In the event of a power outage or server failure, for example, the ACID guarantee ensures that a transaction will not have been partially committed to the database. This ensures total data consistency and integrity at all times, avoiding complex and labor-intensive investigation and correction routines.

Additionally, TAG uses Atlas Online Archive to optimize its data storage through automated data tiering by archiving data to fully-managed cloud object storage and making it easy to run queries across both. This ensures the transactional environment remains lean, economical, and performant.

Atlas makes it easy for TAG to manage peak loads by unlocking performance visibility through built-in resource monitoring tools. By tracking usage trends, the team can predict periods of heavy traffic and then utilize Atlas Triggers to scale up and down, ensuring the infrastructure is tightly aligned with usage patterns. Atlas Triggers is a serverless functions engine that is available natively in Atlas.

“This level of insight is vital for optimizing costs. We use Triggers to dynamically and precisely manage the use of our MongoDB Atlas resources,” Ferreira explains.

MongoDB helps TAG handle massive write throughput with its ability to process and store large volumes of transactional data with its native horizontal scaling capabilities known as sharding.

“We deal with a high volume of requests, and we wouldn’t be able to fulfill these operations if we weren’t able to parallelize our workloads,” says Ferreira. “This helps us to add more availability and distribute the workloads. Normally in a relational database, it’s not very easy or practical to do that, but using MongoDB has allowed us to add a lot of value and keep the cost of implementation reasonable, without losing the transactional capabilities.”

THE RESULTS

Helping SMEs and the economy to flourish

TAG launched its registry in August 2021 and immediately started processing 20% of Brazil’s credit card receivables. This was a new offering in the market and worked as part of an ecosystem with the other registrars authorized by Brazil Central Bank.

“MongoDB enabled us to launch a platform that met the Central Bank of Brazil’s security requirements against a critical deadline,” says Ferreira. “The stakes were high on this project – if the ecosystem formed by the credit card receivables registration platforms had not been able to operate on the launch date, the market could have suffered a major impact.”

Moretti highlights the strong partnership between MongoDB and TAG, which he credits for helping to maintain momentum throughout the project and identifying smarter ways of working with his small team. “The MongoDB team showed us how to reduce costs by creating efficiencies with the platform’s built-in functionality, and whenever we faced a challenge, they were there to support us,” he adds.

As TAG continues to optimize their platform, the biggest winners are Brazil’s SMEs and entrepreneurs, who have fast access to affordable loans they can use to invest in growing, hiring more staff, or developing new products.

“We were and still are honored to participate in the construction of this new platform for the Brazilian financial services sector, together with MongoDB, which will enable improvements in the lives of millions of people and in our economy, ” concludes Ferreira.