The fintech boom is helping dismantle financial inclusion barriers in Latin America, enabling millions of real-time transactions not only within the region but also internationally. These companies have become a bridge to massify remittances and other money flows. Inswitch shares key insights into this fintech wave in the region and the impact of digital payments.
Amid the fintech boom, Latin America has experienced rapid progress in financial inclusion. Currently, 79% of Latin Americans have access to a financial account and/or debit card, and 88% use a mobile phone to make payments, according to a recent Mastercard study.
Over eight years, Latin America has made significant strides, positioning itself as a more relevant region in this field, moving past the low indicators it had in the past regarding financial inclusion. For example, in 2017, it was estimated that only 55% of the population had a financial account, below the global average of 68% at that time.
Despite persistent challenges, mainly related to the adoption and access to financial technologies, Latin America is breaking paradigms. This is partly due to the emergence of a wave of fintech companies aiming to close historical inclusion gaps and open doors to digital payments for various activities, including remote workers and remittances.
Alongside this phenomenon and the massification of digital payments through fintech, Latin America has benefited from increased reach of remittances, which are a key economic driver for the families of millions of migrants making these transfers.
The Inter-American Development Bank (IDB) estimated in a report that last year, remittances reached a record value of US$161 billion, a 5% growth compared to 2023. Mexico was the main regional destination for remittances in 2024, receiving about US$65 billion. According to the document, in the region, remittances range between US$131 and US$648 monthly, equivalent to 6% to 23% of migrants' incomes.
Specifically in Mexico, the IDB calculated that in 2024, 96% of remittances came from the United States and 1.8% from Canada. In Central American countries, 73.5% of the remittances they receive come from the United States on average. In South America, 35.7% of remittances come from the United States, while 36.2% originate in Europe.
According to data from the Current Population Survey (CPS) of the U.S. Census Bureau, cited in an IDB report, as of August 2024, the immigrant population from Latin America and the Caribbean in the U.S. reached 27.7 million people, representing a 6.6% increase compared to 2023.
Given the high migratory flow and remittances, it's imperative for companies that need to integrate these services into their platforms, such as fintechs, gig economy platforms, neobanks, or e-commerce, to have technological solutions that allow them to manage international payments efficiently, securely, and adapted to different markets.
The growing diversification of remittance origin and destination countries —as seen in South America— demands flexible infrastructures with multi-currency capabilities, strict regulatory compliance, and real-time processing times. Inswitch, which helps companies from various sectors implement their own digital financial services, addresses several of these challenges.
A New Paradigm in Financial Inclusion
One of the most persistent challenges in Latin America's financial ecosystem has been access to international payments and transfers, especially in the crucial corridor between the United States and Latin America, where a significant portion of the region's remittances flows.
Inswitch's new Cross-Border Money Services enables companies in Latin America to manage payments and remittances between the U.S. and the region swiftly, securely, and under their own brand identity.
This service offers real-time processing, MSB licenses in the U.S., white-label solutions, multi-currency transactions, API integration, and regulatory compliance, all with robust regional and global coverage.
Thanks to its API-based platform, Inswitch provides a modular infrastructure that allows:
With MSB licenses in all 50 U.S. states, companies can operate legally on an international scale, maintaining their brand while Inswitch handles compliance, operations, and technology.
This solution is designed for companies managing global payments, from gig economy platforms to retailers, digital banks, money transfer operators (MTOs), remittance operators, and fintechs.
With connections in over 30 countries, more than 160 partner banks, and over 250,000 cash pickup points, Inswitch's offering ensures solid regional coverage and operational efficiency. Additionally, its partnership with Mastercard Cross-Border allows companies to leverage a global payment network to expand their reach and deliver seamless cross-border transfers.
The Fintech Boom in Latin America
Latin America is now regarded as a prime example of how the widespread adoption of fintech has expanded access to financial services, particularly among underserved populations. However, its impact is evident across all levels of society.
According to the latest data from the Inter-American Development Bank (IDB) and Finnovista, the regional fintech ecosystem experienced a remarkable 340% growth between 2017 and 2023. The number of fintech companies increased from 703 in 18 countries in 2017 to 3,069 in 26 countries by 2023.
Brazil, Mexico, and Colombia collectively account for 57% of all fintech companies in Latin America. In terms of the number of platforms, the leading segments in the region are payments and remittances (23%), loans (18%), and business finance management (10%).
The IDB and Finnovista's study, titled "Fintech in Latin America and the Caribbean: A Consolidated Ecosystem with the Potential to Contribute to Regional Financial Inclusion", highlights the positive impact of fintech in the region, particularly due to its focus on underserved or unbanked individuals and businesses.
Of all the fintech companies mapped in Latin America and the Caribbean by these organizations, 57% targeted this demographic, marking a significant increase compared to 2017 (42%), 2018 (46%), and 2021 (36%).
Currently, approximately 25.3% of companies focusing on unbanked individuals operate within the lending sector. Meanwhile, the payments and remittances segment stands out as the leader in serving underbanked SMEs, accounting for 11.11%.
As fintechs solidify their role as catalysts for financial inclusion in Latin America, it becomes crucial to have solutions that not only address local needs but also integrate the region into global financial flows.
In this context, Inswitch emerges as a strategic partner by providing the necessary infrastructure for organizations to efficiently connect with the cross-border payments ecosystem. This enables them to offer their end customers agile, secure, and formal access to remittances, addressing one of the most lagging links in the financial services chain.
By reducing operational and regulatory barriers through adaptable technology and integrated models, Inswitch contributes to closing structural gaps in access to and use of financial services, strengthening inclusion efforts in contexts where cash still dominates and digitalization progresses unevenly.
Opportunity to Further Expand the Impact of Fintech
The fintech industry has the potential to continue expanding its impact on financial inclusion in the region. However, experts suggest focusing efforts to ensure that more people can benefit from the widespread adoption of these services.
Paths to further advance financial inclusion through fintech include the use of digital payments for direct transfers of social aid or salary payments, leveraging interoperable payment networks and the telecommunications infrastructure available in different countries.
Despite the progress made, Latin America still faces challenges in financial inclusion, evident in the persistent use of cash in some countries and the lack of access to digital accounts.
According to Mastercard, countries like Mexico, Guatemala, Honduras, El Salvador, Peru, Paraguay, and Bolivia lag significantly in inclusion indicators, with less than 60% of the population having access to financial accounts.
The report states that "more than 91 million Latin Americans still do not have digital accounts, and another 200 million are in the early stages of financial inclusion."
According to data from the study "Digital Payment Ecosystems in Latin America and the Caribbean", published by the IDB, the adoption of digital payments among the adult population remains low in several countries in the region.
Bolivia ranks among the countries with the lowest penetration, with only 22% of adults making digital payments. It is followed by Ecuador with 29%, Colombia with 30%, Peru with 32%, and the Dominican Republic with 37%. The IDB also notes that cash in circulation (as a percentage of GDP) continues to have significant prevalence in countries like Bolivia (25.3%), Ecuador (16.3%), and Peru (9.70%).
In this context of accelerated financial transformation, where fintechs have proven to be key vehicles for closing structural gaps, it becomes crucial to have technological partners that offer comprehensive, agile, and secure solutions to connect Latin America with the global financial system.
Latin America is at a decisive moment in terms of financial inclusion, driven by the fintech boom, the expansion of digital services, and the strategic role of remittances in local economies. While significant progress has been made, structural gaps persist, affecting millions of people who still rely on cash or lack access to formal financial solutions.
The increasing complexity of migratory flows and the geographic diversification of remittances pose new regulatory, operational, and technological challenges. In this context, Inswitch's solutions, which combine real-time processing, cross-border regulatory compliance, and multichannel adaptability, become essential. Only through modern, flexible, and secure infrastructures will it be possible to consolidate true financial inclusion in Latin America.
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