Newt will launch credit and debit cards with Element
Digital payment platform Newt Corporation has signed an agreement with Element Bank to issue branded credit and debit cards in Mexico, the company announced on Tuesday (February 1).
The new cards are tied to Newt’s planned lending program for businesses, credit unions and government employee programs.
“Signing this agreement with Element Bank gives us more tools to serve our customers and expand our network in Mexico,” said Sergio Maya Aleman, CEO of Newt’s Latin American operations, in the announcement.
“This partnership strengthens our ability to integrate digital solutions for our B2B customers and enriches our business model, including our credit services. Our goal is to offer more financial accessibility and support social inclusion by offering our corporate clients effective solutions for their employees.
According to Newt, these new software and credit solutions combine an improved mobile app and a secure digital wallet. This will allow customers to access self-service features like access to credit at lower cost.
The company cites figures from The Economist which note that as of December 2020, only 37% of Mexicans over the age of 15 had a bank account, and around 86% of all payments in that country were made in cash.
He also cites findings from Fitch Ratings showing that payroll-deductible loans have become a relevant product for non-bank financial institutions and Mexican banks in recent years. At the end of 2020, payday loans accounted for 6% of loans from banks and AMDEN (Mexican Association of Payroll Lenders).
Read more: How some Latin American FIs are embracing the digital shift
On a larger scale, things are changing in Latin America, as PYMNTS research revealed, with consumers in this part of the world increasingly embracing digital payment options.
A study found that the COVID-19 pandemic led 62% of Latin American consumers to reduce the use of cash in 2020. The use of contactless credit and debit cards increased by 40% during the same period.
Another report showed that a growing number of Latin American consumers want faster payment methods, with 80% of respondents saying faster payments were an attractive transaction option. Financial institutions (FIs), and traditional banks in particular, need to remember this shift when thinking about customer retention.