Digital payments platform Newt Corporation has inked an agreement with Element Bank to issue branded credit and debit cards in Mexico, the company announced Tuesday (Feb. 1).
The new cards are connected to Newt’s planned lending program aimed at enterprises, credit unions and government employee programs.
“Signing this agreement with Element Bank provides us with more tools to service our customers and expand our network in Mexico,” Sergio Maya Aleman, CEO of Newt’s Latin American operations, said in the announcement.
“This partnership reinforces our ability to integrate digital solutions for our B2B customers and enhances our business model, including our credit services. Our goal is to provide more financial accessibility and support social inclusion by providing our business customers with effective solutions for their employees.”
Newt says these new software and credit solutions combine an enhanced mobile application and a secured digital wallet. This will let customers access self-service functions like access to credit at reduce costs.
The company points to figures from the Economist that note that, as of December 2020, just 37% of Mexicans over 15 years of age owned a bank account, and about 86% of all payments in that country were made with cash.
It also cites findings from Fitch Ratings showing payroll deductible loans have become a relevant product for non-bank financial institutions and banks Mexico in the last few years. At the end of 2020, payroll loans represented 6% of banks and AMDEN (Mexican Association of Payroll Lenders) loans.
On a broader scale, things are changing in Latin America, as PYMNTS research has found, with consumers in that part of the world increasingly embracing digital-first payment options.
One study found that the COVID-19 pandemic led 62% of Latin American consumers to cut back on the use of cash in 2020. The use of contactless credit and debit card increased by 40% during that same period.
Another report showed that an increasing number of LatAm consumers want faster payment methods, with 80% of those surveyed saying quicker payments were an attractive transaction option. Financial institutions (FIs), and legacy banks in particular, should remember this shift as they think about customer retention.
