Apr 12, 2022 - World

Fintech offers solutions for Latinos without bank accounts

An illustration of a phone with a debit card and cash behind it

Illustration: Gabriella Turrisi/Axios

Financial tech companies are offering ways for Latinos who can’t get debit cards to make cashless transactions.

Why it matters: Latinos are among the most unbanked (no account in the household) and underbanked (an account, but no access to services like loans) population groups in the U.S., government data shows.

Driving the news: Many Latinos say they distrust banks or lack the minimum balance to keep an account open.

  • Reports show that banks have historically charged people of color higher fees, made it harder for them to access business loans or given them higher-cost mortgages.

The impact: It is more difficult for Latinos without bank accounts to access car leases or high-yield savings and to gain financial literacy and develop good credit scores.

  • It also leaves Latinos — particularly undocumented people — more dependent on predatory services like payday loans, which have very high interest rates, or check-cashing or money order services, which have high fees.

In place of banks, Latinos for years have adopted fintech products like Remitly or PayPal’s Xoom for sending remittances.

  • Newer offerings specifically for Latinos and Hispanic immigrants include bilingual digital wallets like PODERcard or B9, which are apps with linked prepaid debit cards that can be used in stores and ATMs, with no fees nor minimum amounts.
  • Welcome Tech, which owns PODERcard, is also working on a credit card system and telemedicine and prescription discounts offerings, company co-founder Raúl Lomelí-Azoubel told Axios Latino.
  • Some companies translate credit histories from other countries that could help people not start off with a blank slate.

What they’re saying: “There’s this myth that the migrant and Latino community only wants to make cash transactions, but that only happened because there was no other option," Lomelí-Azoubel said. "We know that this community wants to save, invest, and it needs those financial solutions."

Don’t forget: April is financial literacy month. Some resources that can help Latinos make sense of financial tools include Crediverso, with bilingual tools for guidance and comparing insurance or loan options, and Latino Wall Street’s Spanish courses.

Editor's note: This story has been corrected to reflect that Welcome Tech, not PODERcard, is working on a credit card system, as well as telemedicine and prescription discount offerings. It also clarifies that Raúl Lomelí-Azoubel is the co-founder of Welcome Tech, which owns PODERcard.

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