SAO PAULO (Reuters) – Brazilian digital lender Nubank has signed an agreement with Mexican supermarket chain Oxxo, run by FEMSA, to expand its cash deposit and withdrawal network in the North American country, the companies said announced on Monday.
WHY IT’S IMPORTANT
Warren Buffett-backed Nubank, one of Latin America’s largest companies by market value, has been looking to scale up its operations in Mexico and Colombia after growing in Brazil, its home market, where it has more than 100 million customers.
While Nubank’s operations in Brazil are almost entirely digital, the lender has used several strategies to grow in Mexico, where cash is still one of the main payment methods.
BY THE NUMBERS
The deal will give Nubank’s more than 9 million customers in Mexico access to Oxxo’s more than 22,000 stores nationwide, Nubank said, bringing the lender’s total presence in Mexico to more than 30,000 stores, including previous partnerships.
Cash withdrawals with a Nubank card will be available at Oxxo stores in Mexico from Tuesday, while the ability to deposit cash into a Nubank account will begin “in the following months”, Nubank said.
MARKET REACTION
Citi analysts said the deal is “positive” for Nubank as Oxxo’s network will increase access to Nubank’s customer base in Mexico.
But they said it would “likely be costly” and noted it is not exclusive as Oxxo already offers capabilities to other major banks in Mexico.
“We believe this confirms Nubank’s commitment to offering cash-in/out capabilities at scale, reducing its competitive disadvantage vis-à-vis Mexico’s established banks,” the analysts, including Gustavo Schroden, wrote in a note report to customers.
(Reporting by Andre Romani; Editing by Leslie Adler)