BNPL is the path to consumer banking in Mexico
Besides the sheer convenience they offer, most Buy It Now, Pay Later (BNPL) operators are positioning themselves as a way for consumers to make a payment without having to use their credit card or dip into their accounts. savings. It’s a solid value proposition with a proven universal appeal across the globe, though far from the only attractive aspect.
Indeed, BNPL emerges as a solution enabling millions of unbanked and underbanked customers around the world to start accessing financial services for the first time, especially in developing economies, where much of the world population tends to work in the informal economy. This is the opportunity pursued by the Mexican supplier BNPL Kueski.
“The potential we have is that we don’t just solve the credit side of things; we also solve the payment aspect, ”said Kueski CEO Adal Flores in an interview with Karen Webster of PYMNTS.
Flores said the reality is that most people in Mexico – and, in fact, most of Kueski’s customers – are unbanked. Cash still accounts for over 90% of transactions and most consumers do not have a credit card. Kueski’s BNPL product, Kueski Pay, offers consumers not only the ability to buy something with repayment over time, but also the ability to integrate into the financial system, build a positive credit history, then start accessing other banking services if they need them. them.
Much more than microfinance
Mexican consumers seem eager for this opportunity. Kueski, who closed a major funding round of $ 202 million this month, reports that its gross cargo volume (GMV) growth has more than doubled in the past year. Since the launch of Kueski Pay in early 2020, it has issued more than 5 million loans.
Read more: Mexican platform BNPL Kueski seizes $ 202 million
Kueski, as a credit provider, has been around much longer than that. The financial services platform was founded in 2012 as a microfinance service, Kueski Cash.
“When I started the business BNPL was the original idea, but I didn’t think the market was ready in terms of e-commerce adoption and smartphone penetration etc. ”Said Flores. “So we launched the microfinance product to create a database to understand consumer behavior and build our underwriting model. “
A successful tactic for Kueski, who saw the adoption of its BNPL offer take off, becoming much larger than Kueski Cash in terms of volume, less than two years after its launch.
See also: Why buy now, pay later is sweeping the world
Like all BNPL providers, Kueski uses a different credit rating model than traditional banks. There are few barriers to registration, as customers either need to provide their bank details or pay a cash deposit the first time they use the service.
The company offers customers a choice of repayment schedules, with four interest-free payments over a maximum of six months, or even longer maturities with very low interest rates. It’s also flexible with its refund options, giving customers the option of making these payments by direct debit, wire transfer, or cash at a store.
Facilitate an economic shift
While many lenders view the cash payment option as risky, Flores said there is a need for Kueski to serve consumers who choose to use cash as their preferred payment method.
“In Mexico, most people work in the informal economy and they don’t want to open or use a bank account,” Flores said. “So we don’t want to force them to use a bank account. We can enable someone who is 100% outside the formal economy to start accessing credit. “
Also read: FinTech lobbies FI giants to boost SME lending in Mexico
Risky, perhaps, as the refund is not tied to an automatic debit from a consumer’s account on a specific day and time, but Flores said he was very happy with the refund rates across the board. domains, including with consumers who pay in cash.
As to why, Flores said it was about offering consumers a service they see as extremely valuable – and to which they don’t want to lose access.
“If consumers value our service and they have to fail someone, they usually decide to fail someone else, not us,” he said. “It’s because they really want to keep using our service. “
Looking ahead, Flores said he believes Kueski can build on that loyalty, creating partnerships that will move the nation forward towards the cashless economy, just like Alipay has done in China.
At the end of the day, he said, “We want to make the financial life of people in Mexico easier.”