Amid the lag in financial inclusion among Nicaraguans, the use of debit and credit cards continues to consolidate itself as the second means of payment after cash. At the end of the first half of 2024, 2.9 million cards were in circulation, most of them debit cards, meaning that around half of Nicaraguans over 19 years of age had a debit card. There were also 685,947 credit cards, which means that only 16 out of every hundred Nicaraguans used one.
The report on Payment Systems and Services in Nicaragua, for the Second Quarter of 2024, recently published by the Central Bank of Nicaragua (BCN), explains that payments in the economy are made through different means, the main one being cash. But there are others that function as substitutes for money; in Nicaragua, checks, credit, debit and prepaid cards, electronic transfers and mobile wallets are used, among others.
The BCN report details that at the end of the second quarter of 2024, 2.9 million cards were active and in circulation, a figure higher than the 2.8 million recorded in the same period in 2023, and 52 percent more than the 1.9 million in circulation at the end of 2018. Of the 2.9 million cards that were in use as of June 30, 2.2 million were debit cards (75.1 percent of the total), 685,947 credit cards (23.4 percent of the total), and 43,574 prepaid cards (1.5 percent of the total).
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The use of cards is growing
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In addition, 329,197 electronic money accounts were registered, representing an increase of 19.3% compared to the second quarter of 2023; and there were 650,660 digital wallet users, an increase of 8.4% compared to the same period last year.
In total, during the second quarter of this year, 56.5 million transactions totaling one trillion córdobas were carried out with these payment instruments. These transactions included payments with checks, payments with cards, interbank transfers of funds and the use of electronic money. Compared to the same period last year, the use of payment instruments reflected a year-on-year increase of 3.5 percent in value and 17.6 percent in the number of transactions.
In the case of cards, according to the BCN, during the second quarter of 2024, 39.7 million transactions were made with credit and debit cards, for a value of 135,897 million córdobas, which, compared to the same period in 2023, represented an increase of 13.2 percent in volume and 15.6 percent in the value of transactions.
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Debit cards are the most used
Likewise, by type of card, 11.5 million transactions were made with credit cards, which represents a year-on-year growth of 20 percent compared to the same period of the previous year. These transactions mobilized 27,683 million cordobas, an amount 21.4 percent higher than that reflected in the reference cycle of the previous year.
Among all these payment instruments, the most widely used continues to be the debit card, which is increasingly used by more companies to pay their employees’ salaries, but is also used by savers at financial institutions. In the second quarter of the year, 28.3 million debit card transactions were recorded, an amount that represents a year-on-year growth of 10.6 percent, for a total value of 108,215 million cordobas, an amount 14.2 percent higher than the reference period of the previous year.
The 2.2 million active debit cards reported by the BCN at the end of June represent an increase of 70 percent compared to the 1.30 million in circulation at the end of 2018.
Read also: Why the amount of córdobas circulating in Nicaragua has doubled since 2018. These are the reasons
Prepaid cards in decline
Despite this growth in the use of debit cards, financial inclusion remains a pending task among Nicaraguans. According to the National Institute for Development Information (Inide), Nicaragua has 4.13 million inhabitants over 19 years of age, which means that less than half of the adult population has access to this payment instrument.
The gap with credit cards is even greater, since according to the BCN at the end of the first quarter there were only 685,947 cards in circulation, which means that only 16 out of every 100 adults had a card.
Meanwhile, prepaid cards continue to decline. Currently, only one bank in Nicaragua offers them. They differ from debit cards in that they are recharged every certain period and only the amount recharged can be used. At the end of the second quarter of the year, there were 43,574 cards of this type in circulation, almost half of those used at the end of last year, and nearly a third compared to the 125,471 that were active at the end of 2018.
Cards pay for consumption
Overall, in the second quarter of the year, according to the BCN report, the main transaction carried out by card users was the payment of consumption of products or services. These payments represented half of the transactions with debit cards and 94 percent of the operations with credit cards. While the average value of consumption with debit cards was 906.1 córdobas, while with credit cards it was 2,087.3 córdobas.
Regarding the type of currency, 78.9 percent of transactions were carried out in cordobas and the rest in foreign currency, including transactions in dollars or euros.
“Of the total number of credit card transactions, 1.7 million transactions were carried out outside the country (14.7 percent of the total volume) for a value of 5,829.2 million cordobas (21.1 percent of the total value). Likewise, of the total number of debit card transactions, 2.5 million transactions were carried out outside the country (8.9 percent of the total volume) for a value of 3,289.9 million cordobas (3.0 percent of the total value),” the BCN report details.
How is the rise of debit and credit cards impacting financial inclusion in Nicaragua?
Financial Inclusion in Nicaragua: Debit and Credit Cards on the Rise
Nicaragua has made significant strides in promoting financial inclusion, with debit and credit cards emerging as the second most popular means of payment after cash. According to a recent report by the Central Bank of Nicaragua (BCN), at the end of the first half of 2024, a remarkable 2.9 million cards were in circulation, with debit cards dominating the market.
Cash Still King, but Cards Gain Traction
While cash remains the most widely used payment method in Nicaragua, cards are gaining popularity as a convenient and secure alternative. The BCN report highlights that payments in the economy are made through various means, including checks, credit, debit, and prepaid cards, electronic transfers, and mobile wallets. Debit cards, in particular, have become increasingly popular, with 2.2 million active cards in circulation, accounting for 75.1% of the total.
Debit Cards Lead the Charge
The use of debit cards has experienced a significant surge, with 28.3 million transactions recorded in the second quarter of 2024, representing a year-on-year growth of 10.6%. The total value of these transactions stood at 108,215 million córdobas, an increase of 14.2% compared to the same period in 2023. This growth is largely attributed to the increasing adoption of debit cards by companies to pay employees’ salaries and by savers at financial institutions.
Credit Cards Lag Behind
In contrast, credit cards are less popular, with only 685,947 cards in circulation, accounting for 23.4% of the total. Although credit card transactions have increased by 20% year-on-year, they still lag behind debit cards in terms of popularity. The average value of consumption with credit cards stands at 2,087.3 córdobas, significantly higher than the 906.1 córdobas for debit cards.
Prepaid Cards in Decline
Prepaid cards, on the other hand, have experienced a decline in popularity, with only 43,574 cards in circulation at the end of the second quarter of 2024. This represents a significant drop from the 125,471 active prepaid cards at the end of 2018.
Financial Inclusion Remains a Challenge
Despite the growth in debit card adoption, financial inclusion remains a significant challenge in Nicaragua. According to the National Institute for Development Information (Inide), Nicaragua has 4.13 million inhabitants over 19 years of age, with less than half of the adult population having access to debit cards. The gap with credit cards is even more pronounced, with only 16 out of every 100 adults possessing
How do debit and credit card usage contribute to financial inclusion in Nicaragua?
The Rise of Debit and Credit Cards in Nicaragua: A Pathway to Financial Inclusion?
Nicaragua, a country with a lingering issue of financial exclusion, has witnessed a significant growth in the use of debit and credit cards as a means of payment. According to the Central Bank of Nicaragua’s (BCN) report on Payment Systems and Services in Nicaragua for the Second Quarter of 2024, an impressive 2.9 million cards were in circulation, with debit cards making up the majority. This surge in card usage has raised questions about its impact on financial inclusion in Nicaragua.
The Growing Popularity of Cards
The BCN report highlights that payments in the economy are made through various means, with cash being the primary mode. However, debit, credit, and prepaid cards, electronic transfers, and mobile wallets are gaining traction as alternative payment methods. The number of active cards in circulation has increased by 52% since 2018, with debit cards accounting for 75.1% of the total.
Debit Cards Take the Lead
Debit cards have emerged as the most widely used type of card, with 2.2 million cards in circulation. This number represents a 70% increase compared to 2018. The growth of debit cards can be attributed to their increasing adoption by companies to pay employees’ salaries and by savers at financial institutions. In the second quarter of 2024, 28.3 million debit card transactions were recorded, with a total value of 108,215 million cordobas.
Credit Cards: A Growing Presence
While debit cards dominate the market, credit cards are also gaining popularity. As of June 2024, there were 685,947 active credit cards, with a growth rate of 20% compared to the same period in 2023. Credit card transactions mobilized 27,683 million cordobas, an amount 21.4% higher than the previous year.
Prepaid Cards: A Declining Trend
Prepaid cards, on the other hand, have seen a decline in usage. At the end of June 2024, there were 43,574 active prepaid cards, accounting for only 1.5% of the total cards in circulation.
Cards Facilitate Consumption
The rise of debit and credit cards has led to an increase in payment transactions. In the second quarter of 2024, 56.5 million transactions were carried out with these payment instruments, totaling one trillion cordobas. This represents a year-on-year increase of 3.5% in value and 17.6% in the number of transactions.
The Impact on Financial Inclusion
The growth of debit and credit cards has the potential to foster financial inclusion in Nicaragua. With more individuals having access to these payment instruments, they are more likely to participate in the formal financial system
