Argentina’s central bank has approved payment app Ualá’s acquisition of digital bank Wilobank, paving the way for the company to expand its reach in the Latin American financial services world.
As Reuters reported on Friday (June 10), the deal – ongoing since last year – gives Wilobank owner Eduardo Eurnekian a stake in Ualá, which provides payment services to people without a fixed income or access to the traditional banking system.
See also: Report: Mobile payments app Ualá to acquire digital bank Wilobank
“It’s an important step, something that fills us with pride. We became the first fintech to acquire a banking license,” Ualá CEO Pierpaolo Barbieri said in an interview with Reuters, referring to a license in Argentina.
Launched in October 2017, Ualá offers a Mastercard-branded prepaid card and app and allows customers to perform a number of financial services, such as sending and receiving money, online shopping and cash withdrawals. ATMs.
The Wilobank agreement will allow Ualá to carry out operations otherwise reserved for banking entities, such as the payment of salaries and pensions, Barbieri said.
Worth over $2 billion, Ualá has more than five million customers in Latin America. Last year, the company launched Ualintec Capital, its brokerage operation with the aim of expanding the number of investment alternatives it can offer clients through its digital wallet app.
More recently, Barieri announced that he was launching a venture capital (VC) operation, 17Sigma, which will focus on early-stage Latin American startups. He said the company would focus on the pre-seed and seed rounds in Latin America, as this funding phase sees less interest from larger global funds.
Read more: The founder of Ualá in Argentina launches a venture capital fund
Serving the underbanked is a particular challenge in Latin America, where large swaths of the population lack access to financial services. Dealing with this problem also requires promoting financial education, said Paula Arregui, chief operating officer of Mercado Pago, in an interview with PYMNTS last year.
“In some countries in the region, the use of digital payments is sometimes discouraged directly from stores due to high taxes or the high informality of the economy – also a direct consequence of poor financial education – which makes that many people only use cash,” Arregui said.