SAO PAULO (Reuters) – Brazilian digital lender Nubank has signed a deal with Mexican convenience store chain Oxxo, run by FEMSA, to expand its deposit and cash withdrawal network in the North American country, they announced on Monday the companies

WHY IT’S IMPORTANT

Nubank, one of Latin America’s largest companies by market value, backed by Warren Buffett, has been looking to expand its operations in Mexico and Colombia after growing in its home market of Brazil, where it has more than 100 millions of customers.

While Nubank’s operations in Brazil are almost entirely digital, the lender has been using different strategies to grow in Mexico, where cash remains the main payment method.

WITH THE NUMBERS

The deal will give Nubank’s more than 9 million customers in Mexico access to Oxxo’s more than 22,000 stores nationwide, Nubank said, increasing the lender’s total presence in Mexico to more than 30,000 stores, including previous associations.

Cash withdrawals using a Nubank card will be available at Oxxo stores in Mexico starting Tuesday, while the option to deposit cash into a Nubank account will begin “in the coming months,” Nubank said.

MARKET REACTION

Citi analysts said the deal is “positive” for Nubank, as Oxxo’s network will expand access to Nubank’s customer base in Mexico.

But they said it would be “probably expensive” and noted that it is not exclusive, as Oxxo already provides capabilities for other large banks in Mexico.

“We believe it reaffirms Nubank’s commitment to offering cash in/out capabilities at scale, reducing a competitive disadvantage with incumbent banks in Mexico,” analysts including Gustavo Schroden wrote in a note to clients.

(Reporting by Andre Romani; Editing by Leslie Adler)