Visa and Mastercard Teaming Up with Fintechs to Provide Financial Services to Unbanked in Latin America

Visa and Mastercard have recently revealed plans to partner with fintechs to help provide increased financial access to consumers in Latin America, a population that has traditionally been severely unbanked and thus has turned to nonbanks for financial services.

“We’re helping our partners in the U.S. and worldwide in a range of areas including digital wallets, crypto-linked card programs, digital banking, buy now/pay later, B2B payments, cross-border remittances, bill payments, payments infrastructure and P2P payments,” said Terry Angelos, global head of fintech at Visa, according to American Banker.

The World Bank found that only 56 percent of people in Latin America have traditional bank accounts, whereas 85 to 90 percent of the U.S. is considered banked. Many Latin Americans have been opening accounts with fintech companies. Because these fintechs have succeeded in reaching a traditionally underserved market, tech partnerships are seen as crucial to U.S. card networks’ efforts to expand.

Nearly half of Latin Americans who have traditional bank accounts also have digital-only bank accounts or digital wallets. In 2021, 88 percent of the population in Brazil had digital accounts with banks and/or fintechs.

Mastercard’s partnership goes beyond issuing cards to consumers, but their Start Path program enables collaboration with later-stage fintechs to add value to the payments industry. “We believe in enabling everyone to participate in the modern economy with digital-first payment tools,” said Tim Montgomery, the company’s senior vice president of digital partnerships.

Visa’s goal with fintech partnerships is to focus on financial infrastructure development to modernize the financial services industry in Latin America. Last year, it partnered with and invested in Belvo, a Latin American open finance and digital ID verification provider.

“Latin America’s financial services infrastructure is mostly legacy, so we work with fintechs that offer digitally native issues processing or card issuance platforms, enabling other entrepreneurs to build on top of modern infrastructure,” said Visa’s head of fintech Arnoldo Reyes.