A fintech app opens doors to tortilla shops that banks closed

Mexican tortilla producers built their business even when banks were closing their doors, but technology opened new doors for them to enter the financial world for the first time, a trend that is growing in Latin America.

Also reluctant to accept business formalities, tortilla makers, present in every Mexican neighborhood, developed a mobile application that allows them to charge for their products with cards, QR codes or with their cell phone number.

With this technology, they also offer their clients a means to make telephone recharges or pay public services, in exchange for commissions that would allow them to generate extra income of 300 to 1,900 dollars per month, estimates the National Tortilla Council (CNT), which conceived the app together with the fintech Finsus.

For many users it is their first link with financial circuits.

For many, the tool represents their first link to financial circuits in this country where only 49 percent of its 129 million inhabitants have a bank account and where there is a high level of informal employment.

Although it is still in the testing phase, the application is already streamlining the work of Abel García, a successful 60-year-old producer who has been in the business for 25 years.

Owner of several tortilla shops, he recalls the difficulties he had in starting out as he was unable to obtain a bank loan.

“It used to be difficult to get credit. Very, very difficult!” García recalls in the populous capital district of Iztapalapa, where he has his establishments under the brand Soy de México.

His success eventually gave him access to banks, but with limitations that eventually tired him out. “That’s why we broke the checkbook,” he says, referring to his estrangement from the banking system.

Breaking through a sector that typically uses only cash payments

The basic ingredient of tacos, tortillas are consumed by practically the entire population, and their production involves 110,000 to 135,000 businesses, according to official and industry figures. A kilo costs 20 pesos (one dollar).

But most businesses are informal.

In Mexico City, for example, there are some 18,000 tortillerías, and according to the local government only 10.4 percent of these businesses are registered.

This is why it is common for producers and customers, without access to the financial system, to prefer cash.

The most recent survey (2021) by the National Banking and Securities Commission (CNBV), the banking sector regulator, indicates that 64 percent of Mexicans prefer cash over plastic money, while only half of those who have an account use payment applications.

María Adelaida Francisco, an employee of the Abogados tortilla factory in the Tláhuac municipality, had never had an account or app financial until Jorge Ramírez, his boss, suggested he use the CNT application.

“That’s where I pay the electricity bill and transfer it to my boss,” says the 40-year-old woman.

Some producers also avoid banks, fearing paperwork or debts. “They are a little afraid of the Treasury issue or they don’t know about it,” explains Ramírez, a 35-year-old lawyer who does contribute to the treasury. Several of his eight employees already use the app to collect their salaries.

A study by the Inter-American Development Bank (IDB) and the Finnovista company, released last June, indicates that Mexico is the second country in the region with the largest number of fintech ventures, with 20 percent of the total, behind Brazil (24 percent).

In fact, the sector, made up of companies that use technology for financial services, grew 340 percent between 2017 and 2023 in Latin America and the Caribbean and exceeds 3,000 emerging companies, the report indicates.

““Turn the tables”

Despite the progress, Homero López García, president of the CNT, points out that the financial inclusion of the tortilla industry is still “zero.”

“Banks don’t believe in the industry. When I tried to propose this situation (the application), 90 percent of them told me to go to hell,” he says.

But the app can change that story.

“We are turning the tables. They (the members) say ‘I like it, I understand it’ and we are entering. It is revolutionizing the industry,” adds López, who hopes that the tool will be adopted by 40 percent of businesses in one year and reach 90 percent in three.