Revolut, a financial technology firm, is reportedly making a substantial investment of over USD 100 million in Mexico's remittance market. The CEO of Revolut Mexico, Juan Miguel Guerra, mentioned to Reuters on Wednesday (17 April) that the majority of this investment will be allocated towards hiring staff, covering short-term debts and expenses and maintaining a robust cash reserve.
Guerra expressed that they will closely monitor the business's progress, intending to make further investments as the business grows. The burgeoning presence of fintech companies in Latin America has been notable in recent years, particularly as they cater to the financial needs of unbanked or underbanked individuals.
According to reports, remittances to Mexico reached a record high of USD 63.3 billion in 2023, predominantly from Mexican migrants residing in the United States. Revolut, having recently acquired a banking license in Mexico, aims to introduce services like bank accounts and cross-border shipment facilities in the country, aligning with its European product offerings.
Revolut's expansion plans extend beyond Mexico and Brazil, where it currently operates. Guerra anticipates further growth in other Latin American regions where obtaining a banking license is feasible with minimal resources.
This news follows a recent report indicating that an investment trust managed by Schroders has increased its stake in Revolut, citing a 45 per cent increase in the company's value since 2023. The investment group emphasised Revolut's substantial progress over the past year, particularly highlighting its international service expansion.
In light of these developments, PYMNTS explored the challenges associated with building cross-border payment solutions. The G20 has recognised the necessity for enhancing the speed, cost-effectiveness, and transparency of cross border payments. Failed cross-border transactions alone cost U.S. merchants an estimated USD 3.8 billion in sales in the previous year.
In response, the industry is increasingly turning to partnerships as a means of addressing these challenges. Igor Bazay, head of finance at Enigma, emphasised the importance of partnerships, indicating a shift in the build versus buy versus partner debate.
Overall, Revolut's significant investment in Mexico's remittance market underscores the growing importance of fintech firms in addressing financial needs across borders, while highlighting the evolving landscape of international payments.