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Oyster Financial Introduces Only Neobank Credit for Mexican SMBs

March 25, 2021 / Anurag Khadkikar

Oyster Financial, a neobank and valued financial partner for Mexican SMBs, announced today a first-time offering for the majority of Mexican SMB owners: access to affordable, instant credit and revolving credit lines. Unlike other major banks and financial institutions in Mexico, which do not cater to SMBs, Oyster is solely focused on assisting its clients in making or receiving payments more effectively and optimizing their activities through business-enablement tools.

Starting today, Oyster is making credit available to small businesses in the form of instant credit (ranging from $500 to $1,500) after they open an Oyster business account, which is fast and free to open. Within a few months of opening a new account, actively engaged Oyster customers may be eligible for revolving credit lines of up to US$5,000.

“In Mexico, it takes weeks or even months to get access to ‘instant’ credit for your business, if you are one of few Mexican SMBs to be approved for it. And, unfortunately, eight out of ten small businesses had no access credit to help with the ebbs and flows of business, especially during the pandemic - until today,” said Amanda Jacobson, Chief of Staff at Oyster.

A Cash-Flow Lifeline for Many Mexican SMBs

Small and medium-sized businesses (SMBs) are fighting for survival in the wake of an economic recession in Mexico's economy, which is the second-largest in Latin America after Brazil, has seen the largest annual downturn since the 1930s' Great Depression. Last year, over one million Mexican SMBs (approximately 25%) went out of business. As a result, there is widespread concern about Mexico's ability to generate new jobs and drive GDP growth.

While Mexico's credit-reporting infrastructure is still in its infancy, and the country has a comparatively high rate of money laundering and other financial crimes, opening a business bank account requires a significant amount of paperwork and time commitment. And applying for credit is a completely different and time-consuming process.

“Think of it as having to stand in line at the DMV multiple times for each step in every process: to open a business account, to apply for a credit line or a loan, or to request a credit card,” said David Lin, Chief Credit Officer at Oyster. “And, if you’re one of the lucky few to get credit for your small business in Mexico, you’re likely to pay 2-3 times more for that compared to the U.S.”

Future Roadmap and SMB Customer Benefits

Recently, new laws have been introduced to counter Mexico's widespread lack of financial inclusion, including Mexico's landmark fintech law, implemented in March 2018, which paved the way for open banking in Latin America this year and helped fuel a boom in fintech companies since it was passed. Mexico enacted a much faster way for individuals to launch their businesses at the end of 2016 by a separate corporate organization for firms known as a Simple Stock Company, or SAS.

“Now, Oyster is the only neobank in Mexico, Latin America’s second-largest economy, to provide fast access to credit to small businesses that are the lifeblood of new jobs’ creation for about 95 percent of private-sector jobs in the region,” said Vilash Poovala, Oyster co-founder and CEO. “In the months ahead, we will be rolling out more ways for our customers to interact with all sorts of payment systems, speed up access and better understand their revenue flow.”

Later this year, Oyster intends to introduce a new feature that will enable companies to deposit cash into their accounts at several famous convenience stores, including 7-Eleven, CCK, Farmacias Benavides, Farmacias del Ahorro, and Waldos. The vast majority of Mexicans still opt to pay in cash for their transactions. Also coming later this year: a new method for Oyster customers to send an email link to their customers so they can pay them more quickly and conveniently.

“In the months ahead, Oyster is poised to quickly roll out new and innovative ways to help SMB owners increase the overall health and profitability of their businesses,” said Poovala. “Our vision at Oyster is to become a longtime, trusted financial partner for SMB owners that want to use modern technology to run their businesses from anywhere in the world. For example, unlike many Mexican banks that charge for nighttime or weekend transactions, Oyster customers may pay vendors, employees, online and transfer funds 24/7 for no cost.”

About Oyster Financial

Oyster is a leading fintech company developing a modern finance system for entrepreneurs. The neobank, which has branches in Mexico City and San Francisco, has created its core banking platform to enable small and medium-sized businesses in Mexico to obtain a business banking account and debit card in days rather than months or years. Its vision is to continue developing and launching innovative financial services and products for small and medium-sized businesses (SMBs) that increase revenue and ensure the health and well-being of businesses as they expand.

FinTech Collective, Kevin Efrusy, monashees, Redpoint ventures, S7 Ventures, SV LATAM Capital, and Ulu Ventures are among the investors who have contributed a total of US$14 million in seed funding as of September 2020.