Friday Briefing: New contenders: Mercado Pago in insurance, Ualá in cards

February 17, 2023

#TopStory 🔝

Alliances to expand ecosystems: Mercado Pago enters insurtech

As digital brands mature, they typically expand their product offering. It’s part of building an ecosystem where customers can find everything in one place and something that, in many cases, is achieved through acquisitions or alliances with other companies.

One such brand is Mercado Pago, which has introduced a digital, theft insurance product in Mexico in
conjunction with the French insurer BNP Paribas Cardif. The product is available to user of its wallet and covers cash withdrawals, digital purchases, and the theft of belongings, from as little as MXN$41 (US$2.20) per month.

“Our intention is to continue following the path of intermediaries, as we also do with many other products; for example, remittances in Mexico,” Alessandro Labelli, head of the insurtech division at Mercado Pago México, told iupana.

“Our insurtech vertical is built around well-known insurers, such as BNP Paribas Cardif. And it will continue to develop with other well-known allies because the main thing is to convey trust and security to our users,” he adds.

In remittances, the fintech has also implemented an alliance strategy in Mexico that has led to agreements with Western Union for digital cashout and with Xoom, a PayPal gateway, for sending and receiving international transfers.

Labelli said its insurance product is a first step into the country’s insurance sector, one with ample opportunities for providers of tech solutions.

“Just as we work alliances with insurers, we also
build alliances and products with other insurtechs that offer specialized technological developments to benefit all parties,” he said.

Mercado Pago has already debuted insurtech products in Argentina and Brazil.

#Strategic Plays 📊

Invex launches Mexican neobank

Mexico’s Invex group launched a virtual bank, Now, and joins the list of traditional banks that have created digital brands to break into previously untapped markets. Among its digital rivals are Banregio’s Hey Banco and Grupo Salinas’s BAZ.

Ualá enters Mexican credit card market

Argentine fintech Ualá unveiled a Mastercard credit card in Mexico, which was made possible thanks to its acquisition of local bank ABC Capital. The company will gradually offer the card to more users and will increase credit limits according to usage and payment punctuality.

Littio and Pomelo launch card in Colombia

Littio, a Colombian fintech that offers global accounts in dollars, joined forces with Pomelo and Mastercard to launch Littio Card. The card has a cashback program on music, mobility and travel platforms.

Credinka and Grupo BVL join forces to provide loans in Peru

MSME lender Credinka and Grupo BVL, owner of the Lima Stock Exchange, came together to expedite the process of disbursing loans using electronic promissory notes from the Ayni
mobile app. The goal is to offer financing to people living in the remotest areas of the country.

Additionally…

• Nicaraguan fintech CashPak teamed up with Mambu, a banking cloud provider, to improve its payment services and better meet the needs of users.
• Argentine wallet Tap migrated all its users to another digital wallet, Prex, as part of its strategy to exit the consumer segment. The firm rebranded itself as Tapi and will now focus on providing
  digital infrastructure to businesses.

#Financial results 🪙

Nubank plans further diversification as profits grow

The Brazilian neobank has chalked up two consecutive quarters of net profit, according to its latest financial results. The fintech reported earnings of US$58 million in Q4 of last year, following a US$7.9 million profit in Q3.

The digital lender had 74 million customers at the end of last year, generating sales revenue of US$4.8 billion. And it posted an annual loss of US$9.1 million,
substantially smaller than the previous year. Against this backdrop, the company pointed out that the development of its product portfolio is still in the early stages, suggesting greater diversification is in the pipeline.

#Investments 📈

Vexi closes investment round for US$8M

Digital bank Vexi, which offers credit cards in Mexico, raised US$8 million in an investment round led by Magma Partners. The firm will invest the proceeds in technology and expanding its customer base.

Vaas raises US$5M to automate structured debt management

Colombian startup Vaas raised  US$5 million in a seed round led by firms such as Andreessen Horowitz (a16z), Mexico’s Nazca, Brazil’s Maya Capital, and angel investors including Sebastián Mejía, a co-founder of Rappi, and Brynne McNulty, a co-founder of Habi. The company automates structured debt processes for businesses.

IncluirTec gets USAID investment for farmer credit

Colombian fintech IncluirTec, which provides small farmers in Colombia with access to formal financing, received an investment of US$420,000 from the United States Agency for International Development (USAID).

#iupanaExclusive 🔥

The millions of people who use electronic money in Latin America demand immediacy in their transactions. This demand for low-cost, real-time payments has led to dozens of initiatives by central banks to create interoperable platforms for quickly sending and receiving funds. So, if you work in banks, fintechs or payment companies, it’s important to know what real-time payment systems coexist in the region.

• Instant payment systems continue to spread across the region, with SPEI in Mexico, Pix in Brazil, Transferencias 3.0 in Argentina, Sinpe in Costa Rica and many more…
• Expediting the
  settlement of payments is a common aim of the region’s central banks.
• Peru and Colombia are also working on new payment platforms.

Get a detailed run-down of the region’s main electronic payment systems in this week’s iupanaExclusive.