Bad Credit

Mexican start-up Stori increases investment by targeting the unbanked

Sherman He, Bin Chen, Marlene Garayzar and Gy Liu of Stori pose for a photo at an event marking Stori’s one million customers, whose credit cards target the overwhelming majority of Mexicans who have no type of credit formal, in Mexico City, Mexico March 23, 2022. Picture taken March 23, 2022. Stori VP/Handout via REUTERS

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MEXICO CITY, March 29 (Reuters) – Fintech Stori, whose credit cards target the overwhelming majority of Mexicans without any type of formal credit, said on Tuesday it planned to invest $175 million to expand into 2022 as it expands its client portfolio and hires more people.

The startup issues its cards to “underbanked” Mexicans like 33-year-old Nadir Redon Texta, who makes a living reselling stainless steel clothing and accessories in the town of Zihuatanejo and has been unable to secure a line of credit in any bank.

“I earn 4,000 to 8,000 pesos every month because my business is informal and seasonal,” he said in a telephone interview. “I started with a monthly credit of 1,500 Mexican pesos ($75.18) with Stori and have always been able to pay it.”

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Only 31% of Mexicans have some type of credit, and those who do tend to use department store or convenience store cards, according to the country’s statistics agency.

Stori extends a line of credit to 99% of applicants after a background check that looks at a combination of factors such as where they live and how they make a living, said Marlene Garayzar, co-founder of the company launched in 2018.

“Some applicants do not have the official documents we need. Otherwise, our acceptance percentage could reach 100%. We give credits as small as 500 pesos and, in our experience, people pay,” said she declared.

Garayzar said Stori, which is backed by investors including US GGV Capital and Goodwater Capital, plans to expand into at least one more Latin American country over the next two years, but declined to say which markets. he was contemplating.

Mexicans with informal jobs or poor credit histories tend to knock on many doors before they can get approved for a loan. This was the case of Eduardo Alvarado, 28, whose card application was rejected by Brazilian fintech Nubank.

“Nu asked me to try again later, so I went to Stori and they accepted me. Months later, I tried again with Nu, and they approved it. I guess that was enough influential to have Stori as the starting credit.” he said.

Stori has a million customers and most of them are first-time credit card holders, while Nubank has about 1.4 million customers in Mexico and 60% of them had another card before contracting its services.

($1 = 19.9515 Mexican pesos)

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Report by Valentine Hilaire; Editing by Christian Plumb and Tomasz Janowski

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