Consolidation of the Fintech Sector Reinforces Mastercard’s Commitment to the Sector

The fintech sector has grown in recent years, in Mexico it was reported the existence of 512 fintech companies in 2021, compared to the 650 identified in 2022. That represents a growth of 26% over last year and a compound annual growth of 18% since 2019 in the number of fintechs operating in the country.

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Mastercard increases its focus on fintech

The growing fintech sector has prompted players to reinforce their bet in the segment. That is the case of electronic payments firm Mastercard which has an alliance with 80% of the fintech players participating in segments such as payments, credit, and services for companies.

The firm has indicated that its participation with technology is long term, although the industry is experiencing a moment of definition, they point out that their presence goes hand in hand with their overall strategy and bet for future developments.

“Today we observe that fintechs have to generate economic incentives to be sustainable over time; we are already in another moment than a few years ago, where there was a lot of liquidity and therefore a lot of bets. Currently, fintech models are beginning to be viewed with some caution in order to be sustainable,” said Mauricio Schwartzmann, CEO of Mastercard Mexico.

The executive said that derived from this context, they expect further consolidation through the purchase of licenses, as there is a trend of technology companies that have acquired banks, Sociedades Financieras Populares (Sofipos) and Instituciones de Fondo de Pago Electrónico (IFPEs).

Part of the firm’s commitment is reflected in the acquisition of Arcus in 2021, a payments firm specializing in real-time transactions. In addition to the use of Application Programming Interfaces.

“With this platform there was a lot of affinity with Fintechs because of the integration mechanisms, via APIs from the perspective of access to SPEI , which is another of the issues or important theses for the acquisition,” explained Pablo Cuarón, vice president of business development at Mastercard Mexico.

In addition, the firm has intensified its efforts in blockchain technology (blockchain), for the development of a payments ecosystem based on this tool, so he indicated it is exploring future use cases and scaling new solutions with fintech around the world through the Start Path Digital program.

“The firm is shifting the focus from simply being a card payments network, to also including other means of payment that are relevant,” Schwartzmann explained.

Mastercard also bets on Open Finance

Part of Mastercard’s bet, it also focuses on Open Finance of which it sees as a critical agenda for the development of the fintech ecosystem.

Although the rules for Open Finance are defined in the Law to Regulate Financial Technology Institutions, also known as the Fintech Law, some of the secondary provisions for financial institutions are pending publication.

“It is a technology in which we have to invest and it is a conversation that we are also having internally, We see everything that Open Finance can allow, if we take it a little bit more, not limited to banking data, but to the rest of the data that is out there, it will be one of the trends that can certainly boost the development of the ecosystem,” explained Cuarón.

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(Featured image by AKuptsova via Pixabay)

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First published in EL ECONOMISTA, a third-party contributor translated and adapted the article from the original. In case of discrepancy, the original will prevail.

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