The Role of Fintech in Financial Inclusion in Nicaragua

Kevin Humberto Castro, Associate at ARIAS Nicaragua and expert in Fintech, presents this article on the role of fintech in financial inclusion.

Digital financial services are gaining increasing traction in Nicaragua. The growth in mobile phone usage, the development of new payment solutions, and the evolution of the regulatory framework have created conditions for more individuals and businesses to access financial tools in a faster and more convenient manner.

In this context, it is worth considering several factors that help illustrate the potential of these tools to promote greater financial inclusion:

• Digital solutions are helping bring financial services closer to more individuals and businesses.
• Electronic payments, digital wallets, and electronic money continue to expand their presence in the market.
• The Central Bank of Nicaragua ("BCN”) has developed a clearer regulatory framework for the operation of these services.
• The growth of the sector creates significant opportunities for innovation, financial inclusion, and economic development.

A natural question arises: why does a significant portion of the population remain outside the formal financial system? The reasons are often familiar: distance from service points, perceived costs, difficulties in meeting documentary requirements, or simply a lack of awareness of the available options. In addition, many people are self-employed and do not possess the documentation or financial records that financial institutions have traditionally relied upon to evaluate prospective customers.

As a result, a substantial share of transactions continues to be conducted in cash. Many individuals keep their money at home, make payments in person, and rely on informal mechanisms when financing is needed. This reality entails costs and risks that often go unnoticed, including exposure to theft, travel time, and the absence of a financial history that could facilitate access to other financial products and services.

It is precisely in this context that fintech solutions become particularly relevant. The term "fintech” combines the words finance and technology and refers to companies that leverage technological tools to provide financial services in a more agile, accessible, and efficient manner.

In Nicaragua, the BCN regulates these entities under the category of Payment Service Financial Technology Providers (PSPs). Among other services, these providers may offer digital wallets for sending and receiving money, electronic money stored in devices or prepaid cards, payment collection solutions for merchants through QR codes or payment links, and fund transfers between users.

One of the most significant aspects of these solutions is that many do not require users to hold a traditional bank account. In most cases, having a mobile phone and completing the applicable identification procedures is sufficient.

Beyond the concept and the regulatory framework, the true value of these tools lies in their practical impact. A neighborhood convenience store or small business can accept payments through a QR code without handling large amounts of cash. A family receiving remittances can access funds directly through a mobile phone, reducing travel time and wait periods. In sectors such as agriculture, digital payments can significantly reduce the risks associated with transporting cash during harvest seasons.

This progress is not merely theoretical. Statistics published by the BCN demonstrate a growing adoption of digital payment methods. As of the fourth quarter of 2025, and according to the Payment Systems and Services Report in Nicaragua published by the BCN, there were 892,834 registered digital wallet users, 478,806 active electronic money accounts, and approximately 3.6 million payment cards in circulation. In addition, transactions processed through payment systems supervised by the BCN recorded year-over-year growth of 60.1% in volume and 23.0% in value compared to the same period in 2024. These figures reflect a sustained trend toward increased adoption of digital financial services in Nicaragua.

Naturally, the growth of this ecosystem requires a regulatory framework that fosters confidence among both users and service providers. In 2025, the BCN updated the regulations applicable to PSPs and Virtual Asset Service Providers, strengthening operational requirements and establishing clearer supervisory mechanisms. Among other matters, these rules require prior authorization to operate, ongoing regulatory oversight, and customer complaint-handling mechanisms.

Likewise, authorized entities must comply with anti-money laundering and counter-terrorist financing standards, including customer identification measures, transaction monitoring procedures, and recordkeeping obligations. These requirements contribute to greater security and trust within the ecosystem.

Notwithstanding the opportunities presented by this sector, significant challenges remain. Digital trust continues to be a critical factor, particularly in light of the increase in electronic fraud and identity theft schemes. Similarly, financial education remains essential to ensure that users properly understand the costs, risks, and benefits associated with available services. Connectivity, interoperability between platforms, and the development of solutions that combine simplicity with appropriate security standards will continue to be key elements for the growth of the ecosystem.

The development of digital financial inclusion in Nicaragua is expected to continue being driven primarily by three factors: remittances, the digitalization of small businesses, and collaboration between traditional financial institutions and fintech companies. Rather than replacing existing market participants, these solutions have the potential to complement their capabilities and extend their reach to segments that have historically faced greater barriers to access.

We also see meaningful opportunities for banks, microfinance institutions, cooperatives, merchants, remittance providers, employers, and technology entrepreneurs. Each of these stakeholders can benefit from tools that facilitate payments, reduce operating costs, and expand access to financial services for a greater number of people.

Ultimately, the potential of fintech lies not only in the technology it employs, but in its ability to expand access to financial services more efficiently, bringing these tools closer to individuals and communities that have historically faced barriers to participation in the formal financial system, while contributing to the country's economic development and financial inclusion.