IDB Lab Invests in Digital Payments for Micro and Small Businesses in Central America

This investment will advance the digitalization and financial inclusion of 70,000 business owners in El Salvador, Guatemala, Costa Rica and Panama.

IDB Lab, the innovation laboratory of the Inter-American Development Bank (IDB) Group, approved a $750,000 investment in the El Salvadoran startup, Cubo, to promote the development of digital payments in micro and small businesses in Central America and contribute to reducing financial inclusion gaps. The users of this fintech platform are overwhelmingly micro-entrepreneurs (90%), with a turnover that does not exceed $230 per month.

IDB Lab’s investment is part of a $3.5 million seed round involving venture capital funds and business groups from the region. The boost to Cubo’s development and expansion plans will make it possible to offer 70,000 beneficiaries, 40% of which are women, tools that help them digitalize and develop their businesses and formalize their relationships with financial institutions.

Digitization continues to be a challenge for micro, small, and medium-sized companies in Central America. In some countries, there is an average of 11 mobile points of sale for every thousand inhabitants, half as many of those as in other countries in our region. Advancing the implementation of the use of digital payments and collections, whether online or in person, increases the business sales capacities of businesses and the opportunities for owners to earn higher income for owners. It also allows for expanded financial inclusion in Central America, where only 43% of the population holds an account at a financial institution, and only 25% make payments by card, compared to 94% and 80% in high-income countries.

Created two years ago in El Salvador, Cubo offers an easy-to-use solution for MSMEs to accept payments with credit or debit cards, links for quick payments, and QR codes for digital payments that can be physically printed or shared digitally. The startup aspires to consolidate its market in El Salvador and expand in Guatemala, Panama, and Costa Rica this year before new financing rounds allow it to launch into other Central American and Caribbean countries.

“Fintech companies have become key agents in helping us achieve greater financial inclusion and digitization in our region. This investment in the technology startup Cubo combines our efforts to boost the nascent Central American entrepreneurial ecosystem with the promotion of accessible and efficient financial services that can improve the business prospects and income of micro-entrepreneurs,” said Irene Arias, CEO of IDB Lab.

This is the first investment by IDB Lab in a Central American fintech, and part of the resources come from the We-Fi initiative. We-Fi seeks to address the restrictions faced by small and medium-sized companies in developing countries led by women.

About IDB Lab

IDB Lab is the innovation laboratory of the IDB Group, the leading source of development financing and expertise for improving lives in Latin America and the Caribbean. The purpose of IDB Lab is to drive innovation for inclusion in the region, mobilizing financing, knowledge, and connections to test early-stage private sector solutions with the potential to transform the lives of vulnerable populations affected by economic, social, and environmental conditions. Since 1993, IDB Lab has approved more than US$ 2 billion in projects deployed across 26 countries in Latin America and the Caribbean. Access our virtual tour

About We-Fi

We-Fi is a collaborative alliance between 14 governments, eight multilateral development banks, and other public and private stakeholders, sponsored by the World Bank Group. It aims to address the financial and non-financial constraints faced by small and medium-sized enterprises owned and operated by women in developing countries. It finances projects, programs, and activities aligned with its objectives and principles. www.we-fi.org