Tribal Credit taps Visa to help scale payment solutions across Latin America

The news: Visa partnered with US-based small-business payments provider Tribal Credit to help expand credit lines, improve card distribution, and update security measures and encryption for Tribal Credit’s business cardholders across Latin America, per Reuters.

More on this: Tribal Credit uses an AI-based underwriting process to approve small and medium-sized (SMB) businesses for its Visa-branded Tribal Card. The interest-free card lets businesses issue multicurrency physical and virtual cards to keep track of business spend.

What this means: With Visa’s help, Tribal Credit can extend its business in Latin America, where there’s strong demand for financing solutions among SMBs.

• Despite accounting for the overwhelming majority of business in Latin America and the Caribbean, SMBs in the region have trouble accessing credit and financing solutions from traditional lenders, which makes it hard for them to build their businesses. Lenders may view SMBs as riskier borrowers since they often don’t keep many of the financial records that lenders require. This makes it harder for them to prove these businesses’ creditworthiness compared with larger firms.
• Tribal Credit and other players, like Brazil’s Open Co, are helping lower these barriers by replacing traditional underwriting with AI-driven processes. Tribal Credit can use Visa’s payment expertise and technology to improve its business cards and reach new customers in Latin America: The fintech said it will focus on Chile, Colombia, and Peru before looking to the wider region.
• The improvements could help make Tribal Credit’s cards and other payment solutions more attractive to customers, helping it gain more business in the region. It also gives Visa more card volume in a rapidly growing region: Visa’s combined credit and debit card volume in Latin America and the Caribbean grew 26.2% year over year (YoY) in its fiscal Q1 2022 (ended December 31, 2021), versus 7.8% in the same period the year before.

The bigger picture: Digital payment methods like cards and mobile wallets are growing more popular in Latin America as consumers and businesses phase out cash use.

The share of point-of-sale (POS) payments made using cash fell 5% YoY in 2021, according to “The Global Payments Report” by Worldpay (owned by FIS). This trend could lead to more partnerships like Visa and Tribal Credit’s as providers look to capitalize on the budding preference for digital solutions.

Related content: Interested in learning on growing payment digitization in Latin America? Check out “Insider Intelligence’s Latin America Trends to Watch in 2022” report.