Mexican firm Kueski has joined forces with retail behemoth Amazon in a strategic move that will see the fintech offering its Buy Now, Pay Later services on Amazon’s marketplace in the country. This collaboration can potentially elevate the BNPL model in Latin America, particularly within the region’s burgeoning e-commerce sector.
Starting this month, Kueski Pay, the fintech’s expanding BNPL service, will be integrated as a payment option on Amazon’s site in Mexico. This would enable Mexican customers to pay for their purchases in bi-weekly instalments. Customers can select repayment plans spanning up to 12 bi-weekly instalments. Kueski will handle financing for these purchases and assess the creditworthiness of each user.
“Paying in bi-weekly instalments is Amazon’s latest initiative to provide customers in Mexico with access to affordable payment methods,” said Karen Pepper, Head of Digital Payments for Amazon Mexico. “Amazon is for everyone.”
Amazon, BNPL and e-commerce in Latin America
While BNPL has grown only gradually in Latin America, fintech firms are increasingly crowding the market in Mexico. BNPL models are emerging as a powerful tool for online shopping in a country where vast swaths of the population does not have a bank account, let alone a credit card.
Founded in 2012, Kueski is one of the largest such firms in Latin America. It caters mostly to the underbanked population in Mexico. The company argues that roughly 60% of adults in Mexico are still underbanked. And that less than one in three adults has a credit card. As e-commerce grows across the region, BNPL tools offer these underbanked customers a way to pay through marketplaces.
In addition, Latin America will continue growing its digital marketplace as the region catches up with other geographies in the world. A recent study by Statista projects the fastest growth for Mexico across the entire continent. It estimates 86% growth from $31.7 billion in 2023 to just short of $60 billion in five years.
A BNPL boost?
Against this backdrop, the Mexican fintech hopes that its new alliance with Amazon, one of the leading marketplaces in a country of 130 million, will provide a meaningful boost for its BNPL services.
“This is a significant step forward for Kueski, and we are thrilled to help pave the way forward for BNPL and increase access to financial services for all Mexicans,” said Andrew Seiz, SVP of Finance at Kueski. “Making BNPL available on Amazon Mexico gives millions more people access to the vast Amazon marketplace wherever they are in the country. “
The Mexican market, too, is highly informal, where many earn their income in cash. Certainly, lending to the underbanked in Latin America carries significant risk. Rising default rates are often a challenge to BNPL providers. In many cases, users do not have a credit history for companies to assess credit risk adequately. Kueski, however, argues that it leans on Artificial Intelligence and its own financial information to mitigate default risk. The company reports over 15 million loans granted so far, mostly low-ticket loans to Mexicans with little traditional financial records.
Mexico has become a pivotal market for financial services startups. Low levels of banking relative to other places in Latin America drive this fintech opportunity. It has led to an aggressive strategy to vie for the underbanked customers. Some fintechs offer high-yield accounts that can go as high as 15%.