Why IDEO Last Mile Money invested in Paisa
From remittances to digital credit — how Mexico based fintech Paisa helps low-income families access loans in Latin America
Global remittances are a massive market: over $50 billion in remittances are sent to Mexico each year, growing 15% each year. These remittances often serve as a lifeline for millions of low-income families. But because over 85% are cashed out, the potential to extend these families’ access to the formal financial system and higher quality services — such as funding housing, business growth, or education — remains limited.
This is in part because the current innovation in the remittance space is often focused on making it easier for the sender, not the recipient. Many financially stressed families who don’t trust or understand formal savings and credit services aren’t able to make the most of these funds.
Ryan Newton wants to change this. With a background in both financial services and international relations, she’s interested in the human side of remittances and how life-changing they can be for low-income families in Mexico and beyond. Her company, Paisa, takes a unique approach by focusing on how remittances can be the gateway to accessible financial services on the receiving end.
Paisa’s first product is remittance-backed loans, which enable recipients to make more of their remittance, paying for school fees and home repairs, providing capital for their businesses, and more.
“For years I kept thinking someone should be building something on the recipient end — there are billions of dollars of formal, documented, predictable income here. But almost every innovation I came across was focused on sending remittances more efficiently. Eventually I decided to just build it myself.” — Ryan Newton, Paisa Founder
What makes Paisa unique
Paisa takes a unique approach — one we haven’t seen anything like before. The company does three things:
- Their product: remittance-backed loans
- Their tech-touch channel through remittance agencies
- The technology they’re built on: WhatsApp platform
Paisa’s remittance-backed loans
The company has reframed remittances as “income,” and collateralizes this income to give recipients access to loans. This opens up a scalable way to underwrite low-cost loans for last-mile users.
The tech-touch model
Currently partnering with seventeen remittance agencies in two of Mexico’s highest remittance-receiving states, Paisa’s remittance-backed loans are made available through local remittance agents, which are usually small mom-and-pop shops. This channel builds confidence, as borrowers can lean on trusted remittance agents for help and support. Additionally, since users usually take out a loan at the same time as they receive a remittance, Paisa leverages an existing touch point, which saves clients both time and money.
WhatsApp-enabled loans
One of the most exciting elements of Paisa is that the entire experience takes place through WhatsApp, a platform with which most loan recipients are already very familiar. Through WhatsApp, users can apply for a loan within minutes, consult the status of their loans, get payment reminders, and initiate payments. Paisa offers 30-day loans with an affordable 5% (on average) monthly interest rate, which is about half the rate of the competition, and has fair and respectful collection processes.
“With Paisa, it takes 15 minutes to have a loan authorization. People love it, it is not complicated.”— Paisa borrower
A strong connection with customers
Another success indicator for Paisa is their strong empathy for their users — and the love their users have for the platform.
Paisa’s team has deep experience in remittances and financial inclusion, from the perspective of operators, policy makers, researchers, and engineers. Ryan has prioritized building a culture focused on listening to customers and understanding their experience and context.
“If we see that a customer hasn’t understood a question in the WhatsApp bot, or is entering incorrect information, we take that as feedback that we need to improve. We do whatever we can, whether it’s intervening manually or calling the customer directly to ensure they can complete the process, have a good experience, and return to Paisa,” Ryan explained.
Customers are loving Paisa, too. One year into business, early traction is promising with a 32% increase month-on-month in registrations since June 2022. The experience is so seamless that it borders on magical, and users are returning: today, Paisa reports over 60% repeat loans being taken out.
“It was very easy, immediate and not much is required.” — Paisa borrower
A partnership with IDEO’s Last Mile Money
As part of the 2022 Last Mile Money Accelerator, IDEO Last Mile Money has recently completed a 5-week design sprint with Paisa focused on the question: How might Paisa’s onboarding journey work seamlessly to create a sense of belonging for new users and improve conversion?
In our research, we interviewed agents, promoters, and borrowers to gain more insight into the Paisa experience today — and where it could go. Borrowers we spoke to appreciate Paisa’s respectful treatment and their fair collection practices, and how different the Paisa service feels as compared to competitors, given its accessibility and ease-of-use. Remittance agents shared how they recommend Paisa as a great option for borrowers because they know that Paisa is easy to access and charges fair interest rates. Agents also appreciate the additional income and business Paisa brings.
Together with users, we reimagined how borrowers get onboarded to the Paisa WhatsApp bot, with a focus on communicating Paisa’s brand values upfront to build lasting relationships, creating a more intuitive and delightful experience, and boosting a user’s agency in the signup process.
What’s next for Paisa
With over $135 billion in remittances sent to Latin America every year by migrants working abroad, the market for Paisa is massive. Currently based in Mexico but planning to expand across Latin America, Paisa is expanding their footprint, growing their business and finding new ways to serve partner agents. To learn more and explore a partnership, please reach out to Ryan Newton.
