Ask a fintech founder: Lionel Carrasco, Leap Financial
On remittances, regulation and the romance that led to Leap
More than 200 million migrants globally send money back home to some 800 million family members, half of whom live in poverty-dense rural areas.1 That flow of money, also known as remittances, grew an estimated 3.8 percent in 2023.2
But the cost to send money cross-border can be steep, especially for migrant workers who don’t earn high wages. The United Nations has committed, by 2030, to reducing the cost of migrant remittances to less than 3 percent of the transaction costs and eliminating remittance options that cost higher than 5 percent.3
Leap Financial is ahead of that goal.
“Our target is that in 2024, we should not be above 2 percent,” said Lionel Carrasco, CEO and cofounder of Leap. “These people work hard. Sending $300 or $500 is a lot of money for them, and losing 10 percent in the transmission is just not fair. It's so inefficient.”
A seasoned tech entrepreneur, Carrasco and his co-founder and wife, Marcela Henoa, are both immigrants from Latin America who emigrated to the United States. Their first meeting in Miami, which now they call home, plays out like a scene from a modern romantic comedy.
She, an electrical engineer, sells a multi-million dollar project to a large consulting firm. He, the CTO of said company, shuts the project down without knowing Marcela is behind it when he meets her at a business meeting.
Cue the ending: They fall in love, start a family and launch a fintech aimed at disrupting the remittances industry. Here, Carrasco shares their script for improving the whole ecosystem.
What is your elevator pitch for Leap Financial?
Lionel Carrasco: We are at the moment where we see the advancement of financial services and fintechs transforming banking in general, making things more accessible, in conjunction with the advancement of conversational AI. Leap is right there at that point because we believe it will be possible to deliver embeddable financial services – in particular, cross-border payments and remittances – in a much more fair and profitable manner.
What problem were you trying to solve when you decided to launch Leap?
Carrasco: My cofounder and I are both immigrants. When we started Leap Financial, knowing the fintech space and banking, we wanted to make the experience easier for other immigrants. But it's not just romantic or about financial inclusion. This is about making the whole machine more efficient. The better that immigrants do, the better the economy does. In the end, we still believe in capitalism. We just believe in it in a more inclusive way and a more efficient way.
What makes your solution unique?
Carrasco: If you add up the top five remittance companies, they don't make more than 20 percent of the market. It's extremely fragmented. One thing that makes our approach different is that we don't want to take a piece of the pie, we're going after the center of the pie. We want to enable everybody to do it better. Our model really is to help the other fintechs and banks, anyone who participates in the remittance business, to make the process more efficient.
Can you provide a specific example as it relates to remittances?
Carrasco: Sixty percent of remittances are sent in cash. People deposit cash at the corner store because they trust the way it works. The problem is cash. The problem is not remittances. We connected to 85,000 points in the country where people can continue to deposit cash, but we make it a lot more efficient and less expensive. We take any method of payment you want, and instead of using traditional remittance models to transfer the money, we use Visa Direct to transfer funds to bank accounts, to credit cards, to debit cards, and to digital wallets worldwide. So if a fintech wants to start participating in the market, we provide them with the tools. We do everything from compliance to risk management to be able to send. Our model also works on the receiving end, so we go to the Mexican retail stores, we go to Colombian banks, to Central American fintechs and say, you can request a remittance here.
You mention Visa Direct. How are you working with Visa to grow your business?
Carrasco: Our work with Visa has to do more with providing efficient and cost-effective ways for people to send money, so Visa provides us with higher discounts per volume so we can transfer that benefit to our partners and the end customers. Visa also offers global reach – to markets where their penetration of debit cards is strong, but also they're working to connect bank accounts and wallets around the globe.
What is one thing you wish you knew when you started on this journey?
Carrasco: Entrepreneurship is like pregnancy. You forget how difficult it was, and then you want another because you remember the good moments. But we didn't know how difficult the regulatory burden would be. We underestimated that because when we see a problem, we think we can fix it, but the politics and the regulatory pendulum is a moving target, and that is something that you need to learn how to live with. The other thing we didn't know, obviously nobody knew about it, is the arrival of AI. For us, it changed the paradigm completely.
Are those the same things that keep you up at night?
Carrasco: Today, what keeps me awake at night is that we are moving too slow, even as we're moving fast. You have to move fast, make mistakes fast in the middle of handling people's money, which is the complex part. So agility is my biggest concern every day.
What is your idea of success for Leap? What are you hoping to accomplish?
Carrasco: That we can change the way things are done in the space that we decided to target. Yes, success comes with an IPO, with a big exit, as soon as our team members get a big check. But the real success, and I think I speak for both Marcela and the team too, is that if in a couple of years, we can say we reduced the cost of remittances to 2 percent for all and that we really changed this old habit, I think that will be success.
What's one word that describes your life as an entrepreneur?
Carrasco: Slalom. You know when you are skiing and you're going down in the slalom, you go at high speed, and if you miss one target, you need to focus on the next one. I think that's a lot of what we feel and do every day. If you like that and you are good at doing that, you can pretend to get to the end. But that's the word that comes to mind when I describe entrepreneurship.
What excites you about the future of payments?
Carrasco: Regulation is important for AI, for payments, for banking. Humans have this nature that needs to be regulated. On the other hand, I believe the future is exciting in payments because the advancement of technology like blockchain will create more transparency. In the end, I believe even banks will learn how to act like a fintech to stream down the processes to make it more consumable. Everybody's going to be a fintech, so what is exciting is that's going to create profit for good reasons and not profits gained with just fees and inexplicable stuff. Transparency is going to be the exciting part in financial services.
Learn more about Leap Financial and partnering with Visa Direct on the next generation of money solutions.
1 https://www.un.org/en/observances/remittances-day
2 https://www.worldbank.org/en/news/press-release/2023/12/18/remittance-flows-grow-2023-slower-pace-migration-development-brief
3 https://www.un.org/en/observances/remittances-day/background