Lightspeed leads Stori’s $32 million Series B to expand credit card access in Mexico

Stori raised new funding to expand access to credit cards via an in-app application, setting its sights on becoming the Ant Group of Mexico.

The $32.5 million Series B round was led by Menlo Park, Calif.-based Lightspeed Venture Partners with participation from existing investors Vision Plus Capital, BAI Capital and Source Code Capital. This round brings the company’s total funding to-date to $50 million. Stori will use the funds to continue expanding access to credit cards to Mexico’s mass-middle and emerging-middle income populations. Stori's mobile focus is similar to the one Tencent’s Holdings WeChat Pay and Ant's Alipay use in China.

“Mexico is the fastest growing e-commerce market in the world,” said Mercedes Bent, Partner at Lightspeed, in a release. “It has one of the top 15 economies in the world. Yet, less than 15% of Mexicans have access to credit cards. We’re thrilled to lead Stori’s Series B financing and partner with the team as they continue to expand access to credit cards and build flexible digital financial products for people in Mexico.”

In January 2020, Stori launched its Mastercard credit card, called Stori Lider, complete with a fully digital application process, mirroring the rollout of the Apple Card. The initial rollout was to 2,000 customers who had pre-registered to join a waitlist on the company’s website.

Shortly after the launch, in February 2020, Stori raised $10 million in a Series A to expand credit card access to over 100,000 Mexican consumers. Stori is striving to drive financial inclusion among Mexico’s middle and emerging-middle class populations as most credit cards held in the country are concentrated with high-income consumers.

Stori is using a technology-enabled underwriting process that allows it to vet thin-file individuals.

Stori is a SOFOM enterprise in Mexico (Sociedad Financiera de Objeto Múltiple), allowing it to offer loans and credit lines without the full banking license required by traditional banks.

In comparison to other Latin American countries, Mexico lags significantly behind in credit card ownership rates, based on World Bank data. In 2017, the latest data available, Mexico had only a 10% penetration rate of credit cards among its country's population. In comparison, Brazil stood at 29%, Chile was at 30% and Uruguay was at 41%, more than four times Mexico’s penetration rate. While other countries such as Honduras (5%), Bolivia (7%) and Guatemala (7%) were below Mexico’s level, they are much smaller countries with lower levels of GDP per capita as reported by the World Bank.

The lack of access to a credit card is also playing a role in limiting the ability for Mexican consumers to participate in the growing e-commerce market. Based on data from global payments provider PPRO, cash is the second most popular payment method for e-commerce transactions in Mexico at 21%, which requires a secondary step of visiting a retailer, such as OXXO, to pay for a transaction. Card transactions only account for 44% of Mexican e-commerce transactions. In comparison 62% of Brazil’s e-commerce transactions use a card for payment and in Chile the figure is 70%.

“By tailoring global best practices in underwriting, technology and user-friendly design, combined with rapid iterations, we’ve found the right formula to deliver a compelling product and experience to the large underserved population in Mexico,” said Bin Chen, co-founder and CEO at Stori, in a release. “Our goal is to become a leading digital bank for the underserved population in the region. The new investment will support our fast growth and will enable us to further strengthen our leading capabilities. In addition, we are benefitting from our investors’ extensive experience building category-defining fintechs like Affirm, Ant Financial and Webank.”