Friday Briefing: Credit card competition heats up in Mexico

#TopStory

Revolut develops superapp in Brazil, eyes Mexico and Chile

British neobank Revolut is preparing to increase the range of services it offers in Brazil and become a financial superapp, just weeks after starting its operations in the country, its local CEO Glauber Mota told iupana.

Revolut has obtained a direct credit society license from Brazil’s central bank, allowing it to expand its offering without the need for local intermediaries. The roadmap for new launches will include investment products, including the possibility of investing in shares abroad.

Although Brazil is in the spotlight, the company is also looking at opportunities elsewhere in the region.

“Brazil is a great market to join the portfolio of countries where Revolut is present, since it has the ambition of being a global platform with local services,” Mota said in an interview. “Fifty percent of cross-border operations in Latin America are in Brazil, and Mexico represents another 20%. That’s why Mexico is our second-largest market and we already have plans in place there,” he said.

The digital bank is also fine-tuning plans for its Mexico debut and testing the waters in Chile. Revolut has a team on the ground in Mexico and has applied for an operating license, similar to its position in Brazil a year ago.

As part of the internationalization process, the neobank has launched a simpler version of its app in Chile —Revolut Lite, which allows remittances— while in Mexico, it plans to launch the full version.

To read the full interview and learn more about Revolut’s strategy in Latin America, click here.

Mercado Pago wants to lead credit card issuance in Mexico

The race to sign up new credit card customers in Mexico continues to intensify. While Nubank leads the charge, new contenders are emerging, such as Mercado Pago, which wants to increase card issuance and expand its local customer base.

The company, which entered the segment in February, stresses that it’s taking a considered approach to originating new credit lines.

“In this first year, we’re being cautious, and it’s a year of learning, but our objective is to be one of the main credit card issuers in Mexico,” José Maceda, Mercado Pago’s head of credit, said at a press conference in response to a question from iupana. “That’s the kind of ambition we have and, therefore, we’re going to be conservative in the sense of having a healthy portfolio,” he added.

Fintechs such as Nubank, Klar and Stori are leading the issuance of non-bank cards in Mexico. Ualá —which has a banking license— and Mercado Pago entered the market more recently. The Mercado Libre subsidiary issued some 150,000 Visa cards between February and May, equivalent to about 1,600 cards a day, or 10% of the market.

Mercado Pago’s expansion strategy will focus mainly on existing customers, such as users of its wallet and marketplace. Maceda said transactional data the company already holds will be key to its card placement strategy, as it seeks to keep default rates in check.

In Colombia, meanwhile, Mercado Pago was authorized by the local regulator to operate as a financing company. The license allows it to offer savings accounts, thereby providing a source of funding for lending products.

#Strategic Plays

Citibanamex acquires license from Deutsche Bank

Citigroup completed its purchase of Deutsche Bank’s operating license in Mexico. The acquisition will allow it to continue offering corporate and investment banking services once it divests the retail business of its Citibanamex unit through a public share sale. The value of the transaction wasn’t disclosed.

#People

Ualá seeks over-50s for senior roles

Ualá began a recruitment drive among those aged 50 years of age in Argentina to fill positions in the areas of user experience and operations. The Ualá+50 program is designed to promote diversity among its workforce.

Agibank announces new directors

Brazilian neobank Agibank announced senior management changes. Daniel Farias will lead its product area, after his tenure as executive manager for software engineering and Matheus Girardi, currently head of marketing and client director, will assume responsibility for sales.

Bullla names innovation director

Bullla, a Brazilian fintech that offers credit solutions, has appointed Mauro Gomide director of technology and innovation. He previously worked at card payment operator Cielo.

#iupanaExclusive 

Is there more money to be made in remittances? This week, Mercado Pago explains how the cross-border transfer business in Mexico can move an entire ecosystem by cross-selling, and thereby increase profit margins.

• Remittance volumes in Mexico continue growing, creating space for new participants and business models.
• Mercado Pago has formed alliances with Western Union, Xoom and Félix Pago in order to participate in the reception of remittances. It also has a tie-up with brokerage house Grupo Bursátil Mexicano (GBM) to allow users to invest the money received.
• The fintech says that participating digitally in the remittance business can be costly since many Mexican consumers are accustomed to withdrawing money in cash.

Find out how Mercado Pago makes remittances profitable in this week’s  iupanaExclusive.