Friday Briefing: Mexican fintech Oyster changes business

May 20, 2022

#TopStory 🔝

Mexican fintech Oyster changes business

The Mexican authorities appear to be accelerating their vetting of fintech license applications but the effects of past decisions are still lingering during this time of transition.

The impact on Oyster was apparent this week. Conceived as a digital bank for SMEs, the fintech announced the closure of its digital wallet and its transformation into a remote payment provider, in a 180-degree turn that caught the attention of the Mexican fintech community.

The change of direction is a delayed effect of the regulator’s decision to turn down a license request from Cacao Paycard, which provided Oyster with the infrastructure to issue cards under the Fintech as a Service (FaaS) model. Another option would have been applying for a license to operate as an Electronic Payment Fund Institution (IFPE).

“Seeing that collaborating with Cacao was no longer an option for us and that getting an IFPE license could take more than a year, we had to analyze where we could add most value in the short term for SMEs, and it’s certainly in payments,” Amanda Jacobson, Oyster’s chief of staff, told iupana.

As a result, the company decided to change its line of business and is preparing for the launch a new product as a payment facilitator.

“To be a participant in the payment network, all you need to do is register and that’s it. They don’t have to give you authorization, they don’t have to review your manuals. The process is very simple,” Carlos Valderrama, founder of Legal Paradox, a Mexican law firm specializing in fintech, told iupana.

#Earnings 📈

Nu narrows Q1 loss

Brazil’s Nu reported a net loss of US$45.1 million in the first quarter, an improvement on the same period of 2021, when it lost US$54.1 million.

At the same time, the digital bank tripled revenue to US$877.2 million. And Nu continues to attract new customers: it now has 46.5 million active customers, an increase of 82% from a year ago.

Some interesting highlights of its results:

• Its credit portfolio more than doubled over the past year, with a 5x increase in personal loans (credit cards are growing at a slower pace).
• Nubank has a loan portfolio of US$8.8 billion. 💵💵
• Revenue per active customer rose to a monthly average of $6.7 (from $4.1 a year ago)
• It did not disclose its CAC but the average monthly cost to serve each active customer dropped by 30% to $0.70.

The fintech also launched its new NuTap functionality that allows businesses to accept cards without the need for a point of sale terminal, using a cellphone to receive contactless payments. NuTap is aimed at small businesses.

#Investments  📈

Nomad closes US$32m investment round

Nomad, a fintech providing U.S. digital accounts for clients in Brazil, raised US$32 million in an investment round extension led by venture capital fund Stripes and backed by firms including Monashees. The proceeds will be used to bolster its operations, customer acquisition and a newly launched investment product.

#Regulation 📜

Fintechs ask Banxico to rethink SPEI change

A group of payment fintechs has begun talks with the Bank of Mexico (Banxico) about reconsidering its directive to change customers’ CLABE account numbers, arguing that the new requirement is inconvenient and very costly.

Mercado Pago explains how to obtain a license in Mexico

Marco Pérez, legal director of Mercado Pago Mexico, goes through the almost three-year process to obtain its fintech license to operate as a digital wallet

Central Bank of Chile won’t issue a CBDC and explains why

The bank said it doesn’t have sufficient information to start creating a central bank digital currency. For now, it plans to focus on discussions with companies in  ecosystem to get their point of view. It plans to issue a new report at the end of the year. 

#Acquisitions💰

Credijusto purchase of Banco Finterra is official

Credijusto’s acquisition of Finterra was approved by Mexico’s National Banking and Securities Commission (CNBV). The lender was renamed Banco Covalto and will focus on loans for small businesses.

Flink to purchase Vifaru Casa de Bolsa

Flink, a Mexican wealthtech, has agreed to acquire Vifaru, a local brokerage, with the aim of launching a new investment product for its users. The deal is subject to CNBV approval.

(Want to know more about wealthtech in LatAm? Here’s a recent deep-dive.)

#People  💁‍♀️💁 

Mercado Pago names new head for Mexico

Pedro Rivas was named Mexico country head at Mercado Pago. He previously served as country manager of OXIO and as business director of Cabify.

This appointment coincides with the CNBV’s recent authorization for Mercado Pago to operate as an Electronic Payment Fund Institution (IFPE).

#iupanaExclusive 🔥

The evolution of Baz, a Mexican app owned by Grupo Salinas, reflects the growth of multipurpose apps, which are gaining ground in Latin America:

• Baz focuses on small businesses and people on low incomes and has 7 million users, 40% of which are active.
• Juan Carlos Arroyo, CEO of Baz, expects to to include offerings from other companies outside Grupo Salinas in the next six months.
• It will also launch a “hyperlocal” delivery service, which together with motorcycle loans, will allow users to find work as couriers.
• One of the challenges Baz must face is the predominance of cash as a means of payment; it plans to focus on positioning digital payments for this target group, reinforcing the digital financial ecosystem.

Read more here

Over and out

That’s it – you’re up to date! Wishing you a great weekend from the iupana team.

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