Em Conversa seeks to discover the secrets of Latin America (Latam) which caused the fintech market to explode from less than $50 million in 2016 to $2.1 billion in 2022. This week, we spoke to Jairo riverosManaging Director for the Americas and Global Head of Strategy at Paymenton the evolution of the remittance market in Latin America.
Paysend is the payment platform for customers and businesses around the world to pay, store and send money online anywhere, anyhow and in any currency. Paysend is UK based with a global reach and was established in April 2017 with a clear mission to change the way money is moved around the world; it is the first payment disruptor to introduce global card-to-card transfer.
Paysend currently supports connections between 12 billion cards worldwide across MasterCard, Visa, China Union Pay and local card systems in several countries around the world. It actively operates in 60 countries around the world and has a network of more than 110 receiving countries and growing.
With over 20 years of experience in multiple industries such as payments, pensions and investments, we spoke to Riveros to understand how Paysend entered the LatAm market
Can you tell me more about the company and your role within it?
Payment was founded five years ago with a mission to change the way money is moved around the world. The company was launched in 2017 and to date we have served over 7.5 million consumers who send money to over 150 countries worldwide.
To Payment, my role is Managing Director for the Americas and Global Head of Strategy. I am responsible for defining and executing the regional business strategy in the US and Latin America, as well as building our world-class fintech team and obtaining regulatory approvals, licenses and additional partnership agreements across the Americas.
How has the remittance market evolved in LatAm in recent years?
After the pandemic, the world bank estimated that remittances from the United States to Latin America would fall by 20%, but the opposite happened. Remittances began to surge in the region as migrants wanted to support loved ones abroad more than ever.
Until recently, most banks in Latin America lacked digital options such as mobile apps, leading to an increase in the unbanked or underbanked population. Individuals have been forced to manage their finances in person at a physical bank, which is very rare, making it difficult to send fund regularly.
In these cases, users were also confronted with numerous documents that sometimes contained outdated requirements, such as having a fixed telephone service, despite an increased preference for exclusively owning a mobile telephone in countries such as El Salvador and the Republic Dominican. Digital money transfer methods have made it easier to send money to friends and family in Latin America.
How has the remittance market been impacted by inflation?
Even before inflation, migrants often saved money to send to their family each month. Today, 75% of migrants say that the cost of living for those who send money has increased since the beginning of 2022. This has prompted migrants to save even more money for send at home, even with fears of recession in the United States and other countries.
Consumers around the world are also feeling the effects of the inflated rates, meaning many migrants supporting their families have to send additional funds to meet rising costs. Migrants are known to be hard-working and adaptable, so it’s no surprise that those around the world are actively saving their daily expenses in order to maintain their ability to send money at home to support loved ones.
Has LatAm been impacted differently than the rest of the world?
Only 30-50% of the Latin American population over the age of 15 have an account with a financial institution, leading to banking disparities in the region. Additionally, monopolies held by larger financial institutions have held back the progress and personal economic growth of many.
Due to the lack of support from financial services, Latin American populations face barriers to becoming banked, such as regulations and requirements.
Fintechs are democratizing the financial space by offering the unbanked population the ability to manage their funds outside of a traditional bank account. This is why we have seen such a boom in digital penetration and funding in the region. Fintech companies are aware of the barriers faced by underserved populations and are taking important steps to break the cycle, from providing financial education to facilitating access to financial tools for people in developing countries. development.
How can senders be helped in these difficult financial times?
(“49% of respondents even said they went out to eat less and 46% said they cooked more at home to save on daily expenses so they could continue to send remittances overseas.”)
Due to rising costs and rising rates of inflation, many consumers are limiting their recreational spending to ensure they have the funds to support themselves and loved ones during these times.
Separating your costs into essential and non-essential items can help consumers manage their funds and deliberately think about which costs are prioritized over others. Consumers should also create a budget that includes defined financial goals to avoid spending more than they earn.
It’s also good practice to monitor how much you’ve spent in a given week or month. Money management platforms like Payment allow users to track their expenses online and on the go.
What is Payment to help remittance users suffering from the high cost of living and inflation?
With the onset and continuation of covid-19, and the cost of living and inflation rates remaining globally in flux, digital money transfer companies have been touting left and right that they have the fees the lowest in the market. However, customers are still likely to spend more money on transfers due to hidden fees.
Historically, there has been a lack of cost transparency within the industry regarding overall costs. Remittances can face price hikes via exchange rates, transfer fees, receiving fees and more. We are proud to have already pushed towards this mobility goal by offering customers a fixed $2 transfer fee.
PaymentThe promise of users is to provide instant, free and borderless global transfers to enable our customers to send more money to their relatives back home.
What does the company’s roadmap and growth plan look like?
This year, Payment has partnered with Visa Direct, MasterCard Send and MOVii Wallet to expand our digital footprint in the Latin America region. Our team will continue to focus on partnerships like these to expand our capabilities in Latin America to support local economies and contribute to financial inclusion around the world.
We also recently opened our headquarters in Miami, a strategically important location with growing status as the fintech capital of the world, making it the best place to serve. Paymentcustomers in the United States, Canada, the Caribbean and Central America.
Increased internet and mobile phone penetration, as well as the expansion of digital solutions, will further promote financial inclusion in the region as customers seek faster, more convenient and less expensive solutions than those offered by systems. traditional banking.
To Payment we will continue to advocate on behalf of consumers by offering instant, free and borderless transfers so that our customers can continue to send funds at home at a fair rate.