Brazil's Nubank partners with convenience store Oxxo to expand in Mexico

While Nubank's Brazil operations are nearly fully digital, the lender has been using different strategies to grow in Mexico, where cash remains a top payment method.

The deal will allow Nubank's more than 9 million customers in Mexico to gain access to Oxxo's over 22,000 stores across the country, Nubank said, pushing the lender's total presence in Mexico to over 30,000 stores, including previous partnerships.

Cash withdrawals with a Nubank card will become available at Oxxo stores in Mexico from Tuesday, while the option to deposit cash to a Nubank account will start "in the subsequent months," Nubank said.

Citi analysts said the agreement is "positive" for Nubank, as Oxxo's network will expand access to Nubank's client base in Mexico.

But they said would be "likely costly" and noted that it is not exclusive, as Oxxo already offers capabilities for other large banks in Mexico.

"We believe it re-affirms Nubank's commitment to offer cash-in/out capabilities at a scale, reducing a competitive disadvantage with incumbent banks in Mexico," the analysts, including Gustavo Schroden, wrote in a report to clients.