Mexican Buy Now, Pay Later, Nelo App Gets $100M Line of Credit

MEXICO CITY, Oct 19 (Reuters) – Mexican “buy now, pay later” app Nelo has received a $100 million credit facility from U.S. private equity firm Victory Park Capital, which it will use to amortize its loan portfolio and grow its business, the company said on Wednesday.

The funding gives Nelo a boost in an increasingly crowded market as other buy-it-now-pay-later platforms such as Kueski, Aplazo and Atrato vie for customers in Mexico, where credit penetration is low.

Transactions with buy now, pay later companies, through which consumers often pay interest-free installments over weeks or months, surged during an e-commerce boom sparked by coronavirus lockdowns.

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However, analysts have since warned that looser consumer spending and higher interest rates could hurt the business model and force consolidation with bigger players.

With the funding, Nelo plans to amortize its loan portfolio and free up capital to invest in employees, marketing and growth, chief executive Kyle Miller told Reuters.

For now, that growth will be within the borders of Mexico, where credit card penetration is less than 12%, Miller said. “There are quite a few opportunities right here,” he said.

In April, Nelo launched a virtual credit card with Mastercard (MA.N), which allows users to generate a single card for in-app purchases.

Miller said the company uses an underwriting algorithm to determine credit limits and interest rates, and checks users’ credit history with Mexican credit bureaus.

Nelo, which uses an app rather than services embedded on vendor websites, says it has facilitated more than 3 million purchases to date with online retailers such as Walmart (WMT.N), Amazon (AMZN.O ) and cellphone provider Telcel (AMXL .MX).

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Reporting by Kylie Madry; Editing by Sarah Morland and Richard Pullin

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