Digital payment platform Newt Corporation has signed an agreement with Element Bank to issue branded credit and debit cards in Mexico, the company announced Tuesday (Feb. 1).
The new cards are tied to Newt’s planned lending program, targeting corporations, credit unions and government employee programs.
“Signing this agreement with Element Bank provides us with more tools to serve our customers and expand our network in Mexico,” said Sergio Maya Aleman, CEO of Newt’s Latin America operations, in the announcement.
“This partnership strengthens our ability to integrate digital solutions for our B2B customers and improves our business model, including our credit services. Our goal is to provide greater 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 secure digital wallet. This gives customers access to self-service features such as access to credit at a lower cost.
The company points to figures from The Economist showing that as of December 2020, only 37% of Mexicans over the age of 15 had a bank account and that about 86% of all payments in that country were made in cash.
It also cites findings from Fitch Ratings showing that payroll deductible loans have become a relevant product for non-bank financial institutions and banks in Mexico in recent years. At the end of 2020, payroll loans represented 6% of banks and Mexican Association of Payroll Lenders (AMDEN) loans.
Read more: How some Latin American FIs are embracing the digital shift
On a broader scale, things are changing in Latin America, as PYMNTS research has shown, with consumers in that part of the world increasingly embracing digital payment options.
One study found that the COVID-19 pandemic caused 62% of Latin American consumers to reduce their use of cash by 2020. The use of contactless credit and debit cards increased by 40% in the same period.
Another report found that an increasing number of LatAm consumers want faster payment methods, with 80% of those surveyed saying faster payments were an attractive transaction option. Financial institutions (FIs), and legacy banks in particular, should remember this shift when thinking about customer retention.