Bloomberg — Argentine fintech Ualá, which has received backing from George Soros, Steve Cohen and Tencent Holdings, will begin offering credit cards in Mexico through its alliance with ABC Capital.
The service launched Tuesday, according to Ualá's CEO Pierpaolo Barbieri, and as the card is issued through the alliance with Mexican bank ABC, it will allow users to build a credit history that is recognized by the country’s credit bureau, something that’s not possible through cards issued by fintech firms that don’t have a banking license, Barbieri said.
Ualá announced the purchase of ABC in November 2021. The acquisition is still pending regulatory approval.
“What’s different about our credit card in a country where more than 80 million people don’t have access to financial services is that it will allow us to create a credit ladder,” said Barbieri in an interview from Mexico City, where he will be based in the coming weeks. “This is the last step in financial inclusion, the star product that everyone wants but not everyone can access.”
According to the country’s most recent financial inclusion survey, only 33% of adults had access to formal credit in 2021. Ualá provides financial services based on a prepaid card managed through a mobile app in Mexico, Argentina and Colombia. The company will work to launch credit cards in other countries this year, Barbieri added.
The Buenos Aires-based fintech is betting big in Mexico, where it launched in 2020 and last year announced plans to spend more than half of the $150 million it will invest in the next 18 months.
In 2022, the company launched mobile point-of-sales units, a service for clients to receive remittances and personal loans.
A recent surprise increase in the key rate by Banxico, the country’s monetary authority, won’t impact the rate it offers to retail users, added Carlos Hernandez, CEO of ABC Capital.
Ualá expects to break even in Argentina in the second half of this year, Barbieri said, and is not seeking any additional financing, especially not bank loans, which tend to have a higher interest rate.
The company has 150,000 users through its crypto trading subsidiary Uanex, which it launched in Argentina late last year, and only allows trading in cryptoassets it trusts, which are Bitcoin and Ethereum, Barbieri added.
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