Brazilian company Nubank partners with Oxxo store to expand into Mexico by Reuters

SAO PAULO (Reuters) – Brazilian digital lender Nubank announced on Monday that it has signed an agreement with Mexican department store chain Oxxo, run by FEMSA, to expand its cash deposit and withdrawal network in the North American country.

Why is it important

Warren Buffett-backed Nubank, one of the largest companies in Latin America by market value, aims to expand 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 is using different strategies for growth in Mexico, where cash remains the primary means of payment.

In numbers

The deal will allow Nubank’s more than 9 million customers in Mexico access to more than 22,000 Oxxo stores across the country, bringing the lender’s total presence in Mexico to more than 30,000 stores, including previous partnerships, Nubank said.

Cash withdrawals using the Nubank card will become available in Oxxo stores in Mexico starting Tuesday, while the option to deposit cash into a Nubank account will begin “in subsequent months,” Nubank said.

Market reaction

Citi analysts said the agreement is “positive” for Nubank, as the Oxxo network will expand access to Nubank’s customer base in Mexico.

But they said it would “likely be expensive” and noted that it is not exclusive, as Oxxo already provides capabilities to other large banks in Mexico.

“We believe it reaffirms Nubank’s commitment to offering withdrawal and deposit capabilities at scale, reducing competitive disadvantage with existing banks in Mexico,” analysts, including Gustavo Schröden, wrote in a report to clients.