Mexico is the fastest growing e-commerce market in the world. Mexico earned the #1 spot ahead of India, China, Philippines, and Malaysia. This increase in online purchases means that Mexicans are increasingly looking for more ways to digitally pay.
In China, home grown digital payments companies like Alipay and WeChat Pay have the dominant share of e-commerce. In the rest of the world however, debit and credit cards are the way people shop online, including in the US. And so it is with Mexico as well.
While cash is still king in Mexico, card usage is growing rapidly. Mexican card usage in e-commerce transactions grew by 49% in 2019, faster than the 35% growth in e-commerce.
Mexican e-commerce growth is accelerating Mexican credit card growth. And with such a widely underbanked population (37% of Mexicans had bank accounts as of 2019), the opportunity for fintechs providing payment options is abundantly clear.
Mexico has a growing middle class, fiscally prudent and underserved for credit
We’re all familiar with the beauty and culture of Mexico. It’s also a fascinating economy. Its population of 130 million is the 10th largest in the world. Mexico has one of the top 15 economies in the world. Its GDP per capita ($9,946) is on par with China’s.
Mexico is still primarily a cash economy with over 85% of all transactions happening in cash as of 2019. Mexicans have lower debt levels than other LATAM economies such as Brazil — the average household debt load is 16% of GDP in Mexico compared to 30% in Brazil and ~80% in the US.
Yet in Mexico, less than 15% of people have access to credit cards. These cards are largely concentrated amongst higher income Mexicans. Compare this with the US where credit cards are so pervasive in the US that there are over 1B cards in use for a population of ~330M. 70% of Americans have at least one credit card.
These conditions make Mexico poised for financial innovation.
Announcing Lightspeed’s Investment in Stori
Stori launched their credit card product in early 2020 and to date has seen over 1 million Mexicans start applications for a card. Card holders show extremely high usage and activity. Over 20% of transactions are for e-commerce, including top merchants like Netflix, Didi, Mercadolibre, and Uber. Stori is scratching an itch.
We’re thrilled to announce Lightspeed led the company’s Series B financing. We first met the founders over a year ago and were struck by the depth of their experience. They navigated the pitfalls of Covid masterfully (without the benefit of a US style stimulus), and showed that their underwriting models were strong and improving. That is a reflection of the quality of the team. Several of the co-founders spent years at Capital One where they honed their skills in underwriting underserved populations. In total the team has over 100 years of accumulated experience in Mexico & the US at Mastercard, Intel, Capital One, Morgan Stanley, GE Money, HSBC and Compartamos.
This marks Lightspeed’s first large investment in the LATAM region with more to come.