Contxto – Last week, credit card colossus Visa announced a “strategic” agreement with Mexican payment solution, Clip. (Although what “strategic” means in this case has been left fuzzy for now.) The partnership aims to accelerate micro, small, and medium-sized enterprises’ (MSMEs) acceptance of electronic payments.

Visa will help push Clip’s point of sale (POS) terminal solutions onto devices like tablets. Meanwhile, Clip will use its network of MSMEs to amplify the reach of Visa’s card and real-time payment services within the Mexican market. This agreement is the first of its kind between the credit card titan and a fintech in Mexico—although Visa has already been forging these kinds of alliances elsewhere in the region.

Digital payment partnership

Clip and Visa do have some history together. Both have collaborated on joint initiatives in Mexico before. However, their focus was kept primarily on encouraging MSMEs to accept electronic payments and on teaching micro-businesses owners how to use Clip’s solutions and educating them on how to make their enterprise grow.

Conversely, the results of this new collaboration are apparent to even the most cursory onlooker. A quick glance at any of Clip’s bright orange advertising material reveals that trademark Visa blue. It would seem that part of the “strategic” agreement involves some sort of publicity clause.

Financial inclusion in Latin America

There is still a long way to go when it comes to regional financial inclusion. According to a UN regional commission, MSMEs still play a critical role in the economy in this part of the globe. Specifically, they make up 25 percent of Latin America’s gross domestic product. Small is so much the regional norm that 61 percent of all jobs stem from businesses with less than 250 employees—the most accepted definition of “medium-sized.”

Yet in countries like Mexico, access to electronic payments is still a central limiting factor. According to Visa, there are 1,000 POS terminals for every 100,000 people in the country. Compare that to 3,233 in Brazil and 4,787 in Costa Rica.

Indeed, no doubt that other payments giant, Mastercard, will soon start cozying up with Clip’s competitors—think Kiwi, iZettle and Sr. Pago. Even the Mexican government is throwing its chips into the financial inclusion game. Earlier this year, it launches the pilot of its digital payment platform, CoDi.

Therefore, while this agreement flaunts the word “inclusion” around with gusto, some could easily chalk it up as just another cash grab by big payment providers like Visa. Latin America’s cash dependent markets do seem to be ripe for the picking. So, considering that 95 percent of Mexico’s population is cash-only, the Visa-Clip pact sounds most “strategic” indeed.