Remittances represent one of the main sources of foreign currency exchange in Mexico, equivalent to 4% of GDP as workers, mostly from the US, send money back to family and friends in Mexico. According to the Wilson Centre, total remittances to Mexico increased 27.1% between 2020 and 2021 up to a total of USD 52 billion. Such large flows of cash have not gone unnoticed by fintechs seeking to make the remittance process, easier, faster and more secure but now even retailers are getting in on the act.
A Mexican economist commented, “Remittance growth from 2020 to 2021 was exceptionally strong but we are still estimating growth above 13% in 2022. The growth coincides with the moderate economic growth outlook for Mexico, which has been maintained throughout the year. We expect the upwards trend to continue in 2023 and beyond, although more moderate than in the past 2 years, between 7 and 8%.”
“Remittance growth from 2020 to 2021 was exceptionally strong but we are still estimating growth above 13% in 2022.”
Oxxo convenience stores, owned by the Mexican bottler and retailer Femsa, are a key player in the Mexican retail market and have expanded internationally with a footprint of stores across Brazil, Colombia, and Chile. With its brand firmly established in Mexico and beyond, Oxxo now has fintech aspirations. In November 2021, the company launched its own digital wallet, ‘Spin by Oxxo’. The service allows customers to send or receive funds, make deposits, withdrawals, pay bills, and even use a Visa card to make purchases. A year later, Spin has just received the green light from regulators to operate as a fintech company, allowing it to receive remittances.
“Today, most remittances are sent by Western Union, MoneyGram or Elektra (Azteca),” explained a director of a fintech business in Mexico, “Oxxo actually already handles remittances using the MoneyGram network but Spin removes the intermediary and enables a whole new financial offering.”
“Oxxo actually already handles remittances using the MoneyGram network but Spin removes the intermediary and enables a whole new financial offering.”
Director, fintech, Mexico
Spin claims that it will reach 10 million users by 2023. In Mexico, where less than 50% of the population has a bank account, Oxxo has set its sights on the digital financial market, where there is huge potential for growth. Grupo Financiero Banorte, one of the four largest commercial banks in Mexico, has 6.7 million digital clients. Nubank from Brazil, Latin America’s largest fintech, has 2.1 million users in Mexico.
By leveraging its physical store footprint and strong brand, Spin’s growth has been higher than most technology-driven start-ups in Latin America, with Oxxo customers being able to sign up to Spin in every one of the company’s 20,000 branches in Mexico. By downloading the app users can make digital payments and also access a loyalty programme that comes with the account, enlarging the base of clients and giving Oxxo additional routes to market.