Friday Briefing: A regional Pix is already a “real possibility”

November 18, 2022

#TopStory 🔝

A Pix for Latam: The prospect of a regional payment system

This week, the Central Bank of Brazil (BCB) announced that Pix protocols will be open and available to issuers from other countries, which will allow them to replicate the country’s groundbreaking instant payment system (ISP) free of charge.

The declaration by the BCB’s president, Roberto Campos Neto, suggests the possibility of an ISP that’s
interconnected between countries is not far fetched. In fact, the adoption of Pix on a massive scale in Brazil grabbed the attention of countries such as Colombia and Canada, which have already approached the BCB to better understand the platform’s workings.

“Following this announcement, I see the real possibility of a regional instant payment system. More details will need to be discussed, but it is a good start,” Bruno Diniz, managing partner of Brazilian innovation consultancy Spiralem, tells iupana.

In its two years of operations, Pix has
been used by more than 130 million Brazilians and the volume that passes through its system keeps growing: it reached US$189.5 million in October, almost twice as much as in the month of 2021.

According to Diniz, the key to the Pix model lies not only in the technology but also in the mandatory nature of its implementation. In contrast, regulators elsewhere have had try and convince banks to implement plug-and-play systems that impact their interoperability and fees in the long run.

“Banks may not accept it in silence, but it requires a strong, clear dialogue between the
regulator, the financial market and society in order for this to progress in other countries,” says Diniz.

“Beyond the cycle”: Mercado Pago is confident in the future of cryptocurrencies

The monumental crash of the US exchange FTX has not only affected the price of cryptocurrencies but has also raised questions about the sustainability of blockchain-based financial services. Are crypto products built on sand?

For Mercado Pago, the answer lies in the long term. “We believe cryptocurrencies will continue to gain relevance, regardless of the cycle we are experiencing today. Within five years we are going to see a different picture,” says Pedro Rivas, general director of Mercado Pago in Mexico. “They
will be part of the day to day,” he said when questioned by iupana.

The fintech, which is part of Mercado Libre, this week unveiled new functionality allowing users to buy, sell, and hold ether and bitcoin using its wallet. The company said adoption exceeded initial expectations, with 150,000 active users in the first phase of the roll out. And that’s in a context of low prices and screaming headlines.

Controversy about regulation and corporate governance (or the lack thereof) is at the center of the latest crypto crisis. In this context, the fintech stressed that the wallet’s latest feature is built on an alliance with Paxos, a blockchain platform supervised by the SEC.

“The
number one item on the list is security,” said Jorge Cabrera, director of individuals at Mercado Pago. “And that’s exactly why it’s the partner we allying ourselves with. Paxos is a regulated entity in the United States. And it gives us peace of mind that users’ cryptocurrency resources are safe and very well protected,” he added.

#Quote of the week 📆

“We don’t want to scare away the industry. We simply do not want to be able to advertise high, guaranteed returns on crypto assets that are not regulated by any kind of centralized institution.”

Martín Breinlinger, director of the National Securities Commission of Argentina, speaking about his effort to regulate cryptocurrency advertising. Breinlinger this week joined iupanaPRO, our dedicated regulatory service, for its monthly event 30 Minutes Towards the Regulatory Future.

#Financial results💰

Nubank reaches break-even

Nubank posted its first-ever net profit in 3Q, thus reaching its breakeven point and marking a milestone for the fintech. The company reported earnings of US$7.8 million, compared with a US$34.3 million loss in the same period a year ago. Nu increased revenue by 171% year-on-year to US$1.3 billion. Likewise, the neobank added 5.1 million new clients in the quarter and now has more than 70 million across Brazil, Colombia and
Mexico.

Bancolombia: Digital channels are preferred by users

Bancolombia said 83.8% of client transactions were carried out using its digital channels, according to the bank’s quarterly earnings statement. Digital adoption among its customers has grown 76.9% since 2019 and its Nequi digital wallet notched up 14 million users, with an activity indicator of 67%.

dLocal shares collapse on hedge fund bet

Shares in dLocal lost almost half of their value, after the U.S. hedge fund Muddy Waters said it was betting against the Uruguayan paytech’s shares and made multiple allegations about its accounting practices. dLocal presented its financial results on
Wednesday, saying a new profit record was driven by “disciplined execution and a lean culture,” including strong performance in Africa and Asia, with revenue growing four-fold year on year.

#Strategic Plays 📊

Google launches digital wallet in Mexico

Tech giant Google launched its GPay electronic wallet in Mexico. Users will be able to make transactions and save credit and debit card information and even boarding passes. The wallet is available on Android devices.

Afirme introduces Billú, its digital
bank

Mexico’s Banco Afirme launched Billú, its digital bank. Billú will be focused on the metaverse and the hyper-personalization of its products and services. The company, which partnered with the technology company Veritran for development, wants to sign up 250,000 customers during 2023.

Also…

• Payment companies Getnet México and Pacto join forces to digitalize the collections of Mexican restaurants through an “all-in-one” operating system.
• Brokerage house Avenue buys the startup myProfit, a platform that makes it easier to file taxes.
• Colombian fintech tyba and Peru’s Yape — both part of the Credicorp group — launched a new feature called “Invest with tyba,” which allows users of the
  Peruvian wallet to invest from their cellphone.

#Investments 📈

Yave raises US$7.5 million

Yave de México raised US$7.5 million in a seed II financing round that was co-led by Better Tomorrow Ventures and Metaprop. The proceeds will be used to expand its business, which is based on providing mortgage loans to US buyers who want to acquire a property in Mexico.

Trully raises capital for
biometrics

Mexican startup Trully, focused on preventing digital fraud, raised US$4.1 million to strengthen its biometric intelligence platform in LatAm.

#People 🫂

Klar’s Stefan Möller joins Fintech Mexico

Klar CEO Stefan Möller joined the Board of Directors of Fintech México, an association with approximately 200 members from the fintech industry.

#iupanaExclusive 🔥

This year, just eight Latin American fintechs have achieved unicorn status. And the global economic outlook reduces the probability that other startups will reach a valuation above US$1 billion next year. Jonathan Whittle, Co-Founder and Managing Partner of Quona Capital, looks ahead to 2023.

• It has gotten harder to reach a super valuation during the second half of 2022.
• Slower growth in the number of unicorns isn’t necessarily a bad thing.
• Quona Capital just closed a US$332 million fund and sees opportunities in embedded finance.

The outlook for unicorns explored in this week’s iupanaExclusive.