Fiado

Fiado is a Spanish word that translates to "on credit" or "trust." In many Spanish-speaking countries, it refers to a traditional system where shopkeepers allow customers to purchase goods with the understanding that payment will be made at a later date, often weekly or monthly. This practice is based on trust between the merchant and the customer, built over time through a good relationship and reputation.

The fiado system is particularly common in smaller, local businesses and informal markets. It can serve as a vital form of credit for individuals who may not have access to traditional banking services or formal loan options. Customers typically keep a running tab, either in a physical notebook or in the shopkeeper's memory. The expectation is that the customer will pay their accumulated debt in full by an agreed-upon time.

While fiado can foster strong community ties and provide essential financial flexibility, it also carries inherent risks for both parties. For the shopkeeper, there is the risk of non-payment, which can impact their cash flow and profitability. For the customer, the temptation to overspend or the potential for unforeseen financial difficulties can lead to accumulating debt. The success of fiado relies heavily on mutual respect, honesty, and a clear understanding of the terms of payment.