Friday Briefing: Peru plans Pix-style payments system

#TopStory 🔝

Peru aims for its own Pix

Peru is developing an instant payment platform based on cell phone numbers, in an adaptation of Brazil’s Pix model that is slated for implementation in 2023, said Martín Santa María, chief executive officer of the country’s Electronic Clearing House (CCE).

Demand for instant bank transfers has exploded, with volumes increasing 19-fold in the last two and a half years, leading CCE to look at ways to expand the system’s capabilities, Santa María explained at the event ‘30 Minutes Towards The Regulatory Future of Peru‘ this week.

The event was hosted by iupanaPro, our specialized service for digital finance regulation. Next year, the country’s payment system is expected to allow P2P transfers with cell phone numbers, payments to merchants with QR codes, and improvements in cross-border payments, among other changes. Another important step will be the system’s interoperability.

Read the highlights of the exclusive conversation here.

BNPL: Santander and Falabella see potential

Banco Santander and Falabella Financiero are among the regional players eyeing the buy now, pay later (BNPL) credit model, which they say has the potential to continue growing in LatAm and generate income for lenders.

“The product itself is a credit alternative,” said María Eugenia Díaz, corporate leader of BNPL at Falabella Financiero. “It’s a product that has been sustainable and
profitable. What’s different about it is that we are where the client needs credit”.

The risks associated with BNPL have been under discussion after leading fintechs in the segment such as Klarna and Affirm saw their market valuation collapse earlier this year. Traditional banks had previously shown modest interest in the product, preferring to offer other sorts of point-of-sale lending, such as interest-free credit card purchases for cardholders.

“The bank generates earnings, the merchant receives benefits as a result of the agreement, and the client receives its benefits,” said Daniel Hoyos,
director of strategy and business at Banco Santander in Colombia. “In the end, the product can be sustainable and I would dare to say it can be absolutely profitable.”

#Strategic Plays 📊

Ualá swoops on BNPL acquisition

In other BNPL news, the Argentine unicorn Ualá entered the fray by buying Ceibo Creditos, a local fintech specializing in point-of-sale finance. The operation further expands Ualá’s financial product offering, following the acquisition of the Empretienda marketplace in May.

Also…

• Toka obtains authorization in Mexico to operate as an electronic payment fund institution (IFPE) within the country’s fintech regulatory framework.
• Argentine exchange Lemon Cash begins operations in Brazil with the issuance of non-fungible tokens (NFT), in addition to allowing the exchange of reais for
  the most popular cryptocurrencies.
• Mercado Bitcoin, in Brazil, continues to suffer the crypto winter, laying off 100 more workers. That’s in addition to the 90 employees fired earlier this year.

#Regulation ⚖️

In Brazil, lending is expected to increase and interest rates fall should a bill changing the legal framework of guarantees be enacted.

In Mexico, the regulator is strengthening cybersecurity rules in order to equate standards to the service offered and not to the type of company
offering it. The risk is that it could hurt the growth of fintechs.

And in Peru, municipal savings banks will be able to receive deposits and issue debit and credit cards, among other new services. The measure approved by the country’s Financial Superintendency aims to foster competition and financial inclusion.

In addition, the Peruvian regulator asked banks and finance companies to conduct an urgent review of their digital channels following an alleged data leak.

Also…

• In Argentina, funds from digital wallets, whether in fiat or crypto currency, could be seized for debt collection following a recent court ruling. The collecting entity
  in the case was authorized to access funds in a Mercado Pago account to cover the payment of tax debts.

#Investments 📈

Xepelin and Clip get credit lines

Chile’s Xepelin, dedicated to financial solutions for SMEs, obtained a US$140-million line of credit from Goldman Sachs. The deal uses asset-backed securities (ABS) and has an initial disbursement of US$40 million.

Similarly, Mexican paytech unicorn Clip obtained an unsecured revolving credit line for US$50 million from Morgan Stanley, JPMorgan Chase & Co and HSBC. The money will be used
to expand the reach of the company’s POS network.

Also…

• Mexican fintech R2, which provides technology for SME lending, raised US$15 million in a series A round led by Gradient Ventures, Google’s AI-focused fund. The financing will be used to hire new talent as well as develop data and risk technology.
• In Brazil, cryptocurrency credit marketplace Credix raised US$11.4 million in series A fundraising co-led by Motive Partners and ParaFi. The proceeds will be invested in hiring, product launches and portfolio growth

#iupanaExclusive 🔥

This week Wise issued a skeptical opinion on the use of cryptocurrencies in remittances. Pedro Barreiro, head of banking and expansion at Wise in Brazil, said there is not yet a digital ecosystem to support purchases and sales using crypto. This risks generating friction for people who receive crypto remittances, as they are forced to exchange them into fiat currency.

• Wise says that LatAm has great untapped potential in the remittance market.
• It will open offices in Mexico in October this year.
• The company’s
  strategy centers on using local accounts and banking alliances to prevent money having to cross borders.

Learn more about Wise’s strategy and expansion plans for LatAm in our exclusive interview.