Walmart Mexico, a division of the U.S. retailer, announced the acquisition of Mexican payments startup Trafalgar Solutions, which is expected to strengthen its digital wallet initiative.
The retailer giant had said in early March that it had gained regulatory approval to buy a fintech institution. This week, it confirmed the company is Trafalgar but did not disclose the value of the settlement.
“With this acquisition, Walmex will strengthen its financial solutions and accelerate the access of millions of customers to the benefits of the digital economy,” the company said in a press release.
Trafalgar was one of the first fintechs to get a license from the financial market regulator, per the Mexican fintech law. It will allow Walmart to offer a payment platform other than cash and bolster its existing digital initiatives.
The fintech has frozen its services since the start of the year, with a message on its web page suggesting clients should withdraw their resources. The company offered virtual accounts, transfers, and a MasterCard debit card to pay in physical and digital stores.
Walmart’s fintech strategy with Trafalgar acquisition
Walmart is no stranger to Mexico’s financial sector. More than a decade ago, the retailer launched its own bank, which in turn, it eventually sold to Inbursa Bank in 2015.
More recently, in 2018, Walmart launched its application called Cashi, which initially allowed payment for utility services and bills. It then expanded to other products, such as credit and digital payments at Walmart stores. By the end of 2022, Cashi had around 5.4 million customers and is now reportedly targeting the remittances segment.
“Walmart Mexico’s participation in the fintech sector allows it to strengthen Cashi’s value proposition,” the company said regarding its recent acquisition.
By incorporating Trafalgar, the range of services offered by Cashi would grow. Moreover, its clients could now pay outside of the Walmart ecosystem, increasing the brand’s appeal.
“We are celebrating a milestone in our company by venturing into the fintech sector,” said Marcelino Herrera Vegas, Senior Vice President of Financial Services at Walmart de Mexico and Central America. “This acquisition is one more piece that will enable us to continue creating solutions for millions of Mexican customers.”
New players in town
The digital banking sector in Mexico is getting increasingly crowded, with many traditional players making inroads into digital banking. Banorte, one of the leading banks in the country, is moving closer to launching its own neobank this year. By the name of Bineo, Banorte wants to reach 5 million customers in Mexico.
To be sure, it is not the first move from a non-financial company either. One of the most recent contestants in Mexico’s buoyant digital market is Spin, owned by Coca-Cola bottler company Femsa. It leverages the vast network of convenience stores Oxxo, also owned by Femsa.
According to data from Walmart, only 54 million adults have access to financial services in Mexico. Mexico has a population of 130 million.
