There are a handful of clear contenders in Latin America’s fintech race and among them is Spin by OXXO. Supported by its parent Femsa, a major Mexican retailer, the wallet is carving out a space in the country’s fast-growing digital sector thanks to its vast network of OXXO convenience stores and a growing product offering.
The company launched its wallet, Spin by Oxxo, in March 2021 and received an operating license in October. The wallet had 4.3 million users at the end of the third quarter of this year, of which 69% were active. By 2023, it aims to serve 10 million customers with its payment products, loyalty programs and remittances.
It’s an example of the potential for growth not only in embedded finance and integrations in Latin America but also closed circuit payments.
“Without a doubt, OXXO has contributed significantly to the positioning of our brand as well as to the acquisition of users, thanks to the number of stores, and it has helped us complement our value proposition,” says Marcela Vega, CFO of Digital@Femsa, the group’s innovation division, in an interview with iupana. “One of our main competitive advantages is the opportunity to carry out different operations physically in an OXXO store.”
Indeed, OXXOs are a staple of the Mexican landscape. Femsa, which is the second largest retail group in Mexico as well as Latin America, said that in 2021 it opened new stores at a rate of one a day. OXXO currently operates about 20,780 stores that, aside from groceries and beverages, offer 13 million of daily shoppers a wide range of financial services including deposits, bill payments, top ups for cell phones, and paying for online purchases with cash.
The company is now looking to recreate that model in an intuitive, digital environment. In fact, customers use both the stores and the Spin app for many of the same operations: opening accounts, sending and receiving money using immediate electronic transfers (SPEI), bill payments, and cash withdrawals. A loyalty program with 22 million members, which allows Spin card users to earn and spend points, completes the feedback loop.
“The creation of Digital@Femsa is an opportunity to pool all the learning from the financial and digital sectors that we’ve accumulated over the years and transform it into an innovation platform,” says Vega. “The goal is to build an omnichannel portfolio of different financial and digital products and services that simplify the lives of millions of people,” she adds.
Among the planned improvements to the wallet are higher credit limits for its digital accounts and an option to receive remittances in Spin accounts.
Remittances are a major source of capital flows into Mexico. In 2021, the country was the biggest recipient of remittances after India, Vega says. In the first nine months of this year, remittances totaled around US$43 billion and the flows are expected to keep growing, which is prompting startups to try new transnational payment models.
“These numbers encouraged us to develop an alternative so that people who receive remittances can receive and manage the funds through a secure, efficient tool,” she says.
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B2C, but also B2B
In terms of customer acquisition, Spin has more users than Nubank, which reported 3 million users in Mexico at the end of the third quarter, but trails the market leader, Baz, by a long margin. Baz, which is Banco Azteca’s superapp, said it had 10 million users as of September.
However, Femsa’s digital strategy doesn’t stop with Spin: the company is also developing a financial division to serve micro, small and medium-sized enterprises, or mipymes.
Femsa, which bottles and distributes Coca-Cola in 10 countries, is used to thinking in large numbers and has its eyes set on a potential market of 15 million Mexican mipymes, which must first be reached with payment services. With that in mind, a month ago it announced an agreement to acquire Mexican payment aggregator NetPay, a deal it expects to be completed next year.
The company hopes to use NetPay as a platform from which to offer other products and services, such as loans and business management software. It’s a trend that has been growing in Mexico and the rest of Latin America, a region with vast microenterprise sector.
“Our ecosystem includes initiatives not just for offering payment acceptance but also a wide range of additional services related to business management tools, payment of taxes and to suppliers, among other functionalities that are of value to our clients,” Vega adds.
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