Revolut has reportedly made a $100 million-plus bet on Mexico’s remittance market.
Speaking with Reuters Wednesday (April 17), Revolut Mexico CEO Juan Miguel Guerra said the bulk of that investment will be used to hire staff, cover short-term debt and expenses and maintain a strong cash-on-hand balance.
“We will be watching how the business evolves,” he said. “The faster it grows, the more bets we will make.”
The report notes that FinTechs have blossomed throughout Latin America in recent years as these companies tap into a need for financial services among unbanked/underbanked workers.
According to the report, remittances to Mexico came to a record $63.3 billion in 2023, primarily from Mexican migrants living in the U.S. (That’s up from $46 billion recorded during the first 10 months of 2021, per Bank of Mexico data.)
Revolut, which recently obtained a banking license in Mexico, hopes to eventually offer things like bank accounts and services for cross-border shipments, Guerra said, noting that the aim is to “very quickly” bring to Mexico its product lineup in Europe.
Aside from Mexico and Brazil, where Revolut also does business, Guerra told Reuters he expects further expansion elsewhere in Latin America where it can “obtain a banking license with few resources.”
The news comes days after a report that an investment trust overseen by Schroders has upped its stake in Revolut, saying it believed the value of the company had risen by 45% since 2023.
The investment group said in its annual report that Revolut had achieved “solid progress” in the past year and pointed to the company’s international expansion of its services as among reasons for rethinking its stake.
Meanwhile, PYMNTS earlier this week explored the hurdles of building cross-border payments solutions, noting that the G20 has identified a need for players to improve the speed, cost and transparency of cross-border payments.
That’s because failed cross-border payments cost U.S. merchants at least $3.8 billion in sales just last year, according to data in the PYMNTS Intelligence report, “Cross-Border Sales and the Challenge of Failed Payments,” which also showed that 70% of U.S. firms saw higher rates of failed payments in cross-border sales compared to domestic sales.
The marketplace is responding, PYMNTS wrote, by increasingly leaning on partnerships.
“It’s a reevaluation of the question of build versus buy versus partner,” Igor Bazay, head of finance at Enigma said in an interview here last spring. “[W]hat this environment shows is that partnerships should be a part of that conversation to an extent that they were less so in the last couple of years.”
See More In: banking license, cross-border payments, Digital Banking, FinTechs, LatAm, Latin America, mexico, News, PYMNTS News, remittances, Revolut, What’s Hot
Source link : https://www.pymnts.com/news/digital-banking/2024/revolut-invests-100-million-in-mexico-as-remittances-jump/
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Publish date : 2024-04-18 03:00:00
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