Q: What characteristics of the Mexican market attracted Nanopay and what goals did it have upon arrival?

A: Mexico is not our first flagship operation. Our previous experiences have taught us to look for three main characteristics: political stability, a population threshold of 100 million and an expansive telecommunications infrastructure with accessibility between 60 and 70 percent. Since we want to be a fully OTT, digital, financial services platform, our telecommunications benchmarks are a particularly important decider. Beyond these criteria, we also recognized the strategic advantage Mexico offered as part of an ambitious expansion project into Latin America.  

Moreover, in contrast to Eastern countries consumers who save more than they spend, we were attracted to the identified spending habits in Mexico, whose population is willing to periodically indulge. This spending behavior contributes to a dynamic market that requires payment flexibility to support it but, given the existing banking infrastructure, most of its population is barred from access to capital. In recognition of this, upon arrival, we had intended to be a fully digital banking service, following a strictly B2C model to offer a flexible financial services portfolio with ambitions to become one of the biggest digital banks in Mexico.

Q: How has Nanopay adapted its onboarding strategy since arriving in Mexico?

A: We had anticipated that we would have to adjust our onboarding strategy but we were surprised at the dynamism found in Mexico’s emerging economy. Since arriving, we have identified different spending habits and needs in the northern part of the country, which has reliable telecommunications coverage and is influenced by the US. In contrast, the south’s isolated states have a low telecommunication penetration rate and vastly different consumer needs. In this context, an overarching market approach is unwise, so we are adapting.

We captured a market that we had not prepared for, forcing us to recalibrate our market offer to consumers. Initially, our target market was focused singularly on young professionals without credit history, offering them access to capital between MX$750 (US$37) and MX$10,000 (US$496). However, we also garnered the attention of a more mature demographic, which prompted us to create an alternative option with greater purchasing power. Based on their credit history, these clients will be able to access MX$10,000 (US$496) to MX$75,000 (US$3,717). Moreover, among both demographics, we have recognized a demand for buy now, pay later services that we are looking to include in our services portfolio. Overall, this has been a constant learning process as we incorporate consumer needs as fast as possible.

Q: Mexico is a cash country, especially as the informal economy hardly uses CC terminals, much less digital banking. How has Nanopay attempted to tap into this sector?

A: Despite federal and private sector initiatives, the informal economy’s reluctance to adopt financial services has been a challenge for the overall financial ecosystem, which includes fintech. This characteristic of the Mexican economy led us to downgrade our approach to consumers. Instead of being a fully paperless digital and virtual banking service as envisioned, we had to pivot back to the decades old physical credit card with cash-in, cash-out services at different access points. Consequently, we had to ally with banks and other partners to access their physical infrastructure network.

Terminal fintech aggregates are pushing a campaign to include informal commercial spaces, which will further expand the physical payment infrastructure and benefit all consumers. E-commerce companies have gone to great lengths to make uploading goods to their platforms easy and straightforward, providing consumers greater purchasing power. The rapid adoption of digital tools and services was expedited by the COVID-19 pandemic, which forced businesses to adapt or die out.

Q: Has Nanopay recognized any opportunities to expand beyond its B2C model toward small businesses in the informal sectors?

A: Nanopay remains fully committed to B2C financial services but is evaluating the possibility of providing guaranteed payment cards to selected commercial parties in the informal sector, which would allow small-business owners to make deposits on purchases between MX$750 (US$37) and MX$75,000 (US$3,717). This concept is in early development and might be preceded by a product for foreigners, who have been traditionally excluded from credit access from domestic banks. This demographic consists of an estimated half a million to a million people, representing a great opportunity for us that falls in line with our traditional BTC model.

Q: What has been Nanopay’s experience with regulation compliance?

A: Since Nanopay injects capital into the Mexican market and does not practice capital fundraising, compliance has been straightforward. From our perspective, the financial sector needs to be overregulated and we are committed to following through with oversight and regulatory authorities.