Transformation of Buy Now, Pay Later in Latin America
The Buy Now, Pay Later (BNPL) framework in Latin America is transitioning from a niche financing option to an essential part of the payment infrastructure. According to Andrew Seiz, senior vice president of strategic finance at Kueski, this evolution is largely driven by the specific needs of the Mexican market, where a substantial portion of the population remains outside the reach of traditional banking systems.
Challenges of Financial Inclusion in Mexico
In Mexico, approximately 52% of the population is unbanked, and 67% lack access to credit cards. This lack of financial inclusion, coupled with the fact that 79% of all transactions are still conducted in cash, necessitates a proactive approach to payment innovation. Seiz emphasized that within this context, BNPL does not compete with established credit products but instead replaces cash transactions and makes consumption more formalized.
Distinct Approaches in Emerging Markets
The BNPL model in emerging markets such as Mexico is fundamentally different from that in developed regions like the US or Europe. In mature markets, BNPL typically focuses on enhancing checkout flexibility for consumers with established credit histories. In contrast, the landscape in Mexico involves “thin-file” consumers, who represent a significant segment of the market rather than a negligible one.
Kueski addresses this challenge by shifting its core competencies away from traditional credit scoring to a more nuanced risk architecture. The company employs artificial intelligence and proprietary machine learning models to assess hundreds of behavioral and transactional variables in seconds. This capability enables the platform to create predictive models specifically designed for a predominantly informal economy, effectively establishing parallel financial infrastructures that promote greater formal participation.
Investment Trends and Sector Resilience
As global interest rates fluctuate, the long-term viability of the BNPL model hinges on sound unit economics and effective risk segmentation. Seiz noted that every purchase made through Kueski Pay is structured with interest-free biweekly installments, underpinned by disciplined capital management and strong repeat usage.
The growing resilience of the BNPL sector is also attracting interest from institutional investors. There is an increasing understanding that short-duration, data-driven consumer credit in underdeveloped markets can reduce exposure risks compared to traditional long-term sovereign or corporate investments. Seiz pointed out that capital markets are increasingly realizing that such targeted, short-duration consumer credit provides a unique investment opportunity, allowing for more flexible repricing and rapid adjustments as economic conditions change.
Strategic Focus for the Future
Looking ahead, Kueski is prioritizing the deepening of its credit and payment infrastructure rather than a swift jump into “super app” offerings. Although the company’s app has seen nearly 1 million downloads per month, the primary focus over the next 18 months will be on execution strategies and enhancing security to build trust at scale.
Seiz concluded that by reinforcing the foundational infrastructure, Kueski is committed to developing a financial ecosystem that evolves responsibly while adhering to strict capital discipline.