Airwallex has agreed to acquire MexPago, a rival payments company based in Mexico, for an undisclosed sum to expand into Latin America.

The company mainly serves small and medium-sized businesses, competing with PayPal, Stripe, and Block. Each time a transaction is made, Airwallex pockets a fee.

With a younger population and increasing online penetration, Latin America has become an attractive market for fintech firms due to regulatory approvals and customary closing conditions.

Zhang said Airwallex was looking at Mexico as a hedge against geopolitical and economic uncertainty between the U.S. and China.

“Our people export to Mexico to sell to consumers there,” Zhang said. As a result of the supply chain, you can export out of Mexico to other countries.

“You get both inflows and outflows,” he said. That’s what we like most. We can take a global company to Mexico and help them make payments.”

The U.S.-China trade war has escalated in recent years as Washington seeks to address China’s race to the bottom.
In response, China agreed to “substantially reduce” the U.S. trade deficit by increasing its purchases of American goods, although it has struggled to meet this commitment.

Latin America’s largest population is in Mexico, Zhang said. As the trade war intensifies between China and the US, Mexico is gaining ground.”

Mexico is close to the U.S. Labor is cheaper than in the U.S. Much of the supply chain is there. E-commerce also offers plenty of opportunities.”