Em Conversa looks to uncover the secrets in Latin America (Latam) that have caused the fintech market to boom, from being worth less than $50million in 2016, to $2.1billion in 2022. This week, we spoke to Jairo Riveros, managing director for the Americas and global head of strategy at Paysend, about how the remittance market has evolved in LatAm.
Paysend is the payment platform enabling customers and businesses all around the world to pay, hold and send money online anywhere, anyhow and in any currency. Paysend is based in UK with a global outreach and it was created in April 2017 with the clear mission to change how money is moved around the world; it is the first payment disruptor to introduce global card-to-card transfer.
Paysend is currently supporting connections between 12 billion cards globally across Mastercard, Visa, China UnionPay and local card schemes in multiple countries across the globe. It is actively operating in 60 countries worldwide and has a network of over 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 has entered the LatAm market
Can you tell me more about the company and your role within it?
Paysend was founded five years ago with a mission to change how money is moved around the world. The company was launched in 2017, and to date, we’ve served more than 7.5 million consumers who send money to over 150+ countries globally.
At Paysend, my role is the managing director for the Americas and global head of strategy. I am responsible for defining and implementing the regional business strategy across the US and LatAm, as well as building our world-class fintech team, and securing additional regulatory approvals, licences and partnership deals across the Americas.
How has the remittance market evolved in LatAm over the last few years?
After the pandemic, the World Bank estimated that remittances from the US to Latin America would fall by 20 per cent – but the opposite occurred. Remittances began to boom in the region as migrants wanted to support their loved ones overseas more than ever.
Until recently, most banks in Latin America did not have digital options like mobile apps, causing the unbanked or underbanked population to grow. Individuals were forced to manage their finances in person at a physical bank location, which is far and few between, making it difficult to send funds regularly.
In those instances, users were also met with extensive paperwork that sometimes contained outdated requirements like having a landline phone service, despite an increased preference to exclusively own a mobile phone in countries like El Salvador and Dominican Republic. Digital money transfer methods have made sending money easier to friends and family in LatAm.
How has the remittance market been impacted by inflation?
Even before inflation, migrants often saved money to send to their families every month. Today, 75 per cent of migrants are reporting that the cost of living for those that send money has increased since the start of 2022. This has pushed migrants to save even more money to send back home, even with recession worries in the US and other countries.
Consumers around the world are also feeling the effects of inflated rates, meaning many migrants that support their families must send additional funds in order to account for rising costs. Migrants are known to be hardworking and adaptable, so it’s not surprising that those around the world are reportedly actively conserving their daily spending in order to sustain their ability to send money home to support loved ones.
Has LatAm been impacted differently from the rest of the world?
Only 30-50 per cent of the Latin American population over 15 years old have an account with a financial institution, causing banking disparities within the region. Additionally, monopolies held by more prominent financial institutions have stunted progress and personal economic growth for many.
Because of the lack of support from financial services, Latin American populations face barriers to becoming banked, such as regulations and requirements.
Fintechs are democratising the financial space by providing opportunities for the unbanked population to manage their funds outside of a traditional banking account. This is why we’ve seen such a boom in digital penetration and funding in the region. Fintech companies are aware of the barriers underserved populations face and are taking significant steps to break the cycle, whether providing financial education or making it easier to access financial tools for those in developing countries.
How can those who are sending money back, be helped in financially difficult times?
(“49 per cent of respondents even claimed to go out to eat less and 46 per cent said that they cook more at home to save on day-to-day expenses to allow them to continue sending remittances abroad.”)
Due to rising costs and inflation rates, many consumers are limiting their recreational spending to ensure they have the funds to support themselves and their loved ones during these times.
Separating your costs into essential and non-essential items can help consumers manage their funds and think deliberately about what costs take priority over others. Consumers should also create a budget including outlined financial goals to avoid spending more than they earn.
It is also a good practice to watch the amount you have spent over any given week or month. Money management platforms like Paysend enable users to keep track of their spending online and on the go.
What is Paysend doing to help remittance users suffering from the high cost of living and inflation?
With the onset and continuation of covid-19, along with the cost of living and inflation rates globally remaining in flux, digital remittance companies have touted left and right that they have the lowest fees in the market. However, customers are still subject to spending more money on transfers due to hidden fees.
Historically, there has been a lack of cost transparency within the industry when it comes to overall costs. Remittances can run into price hikes via exchange rates, transfer fees, receival fees and more. We are proud to already have pushed towards this mobility goal offering customers a flat $2 transfer fee.
Paysend’s promise to users is to provide Instant, freemium and borderless global transfers to allow our customers to send more money to their loved ones back home.
What does the company’s roadmap and growth plan look like?
This year, Paysend has partnered with Visa Direct, Mastercard Send and MOVii Wallet to expand our digital footprint in the Latin American region. Our team will continue to focus on partnerships like these to expand our capabilities in Latin America in order to support local economies and contribute to financial inclusion across the world.
We have also recently opened our Miami headquarters, a strategically important location with a rising status as a global fintech capital, making it the best place to serve Paysend‘s customers in the US, Canada, the Caribbean and Central America.
The increased penetration of the internet and mobile phones, as well as the expansion of digital solutions, will further enable financial inclusion in the region as customers look for faster, more convenient and low-cost solutions than the ones offered by traditional banking systems.
At Paysend we’ll continue to advocate for consumers by providing Instant, freemium and borderless transfers so our customers can continue to send funds back home at a fair rate.