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Digital payments in Mexico are growing, largely due to the high percentage of unbanked population. With only 49% of adults having access to a bank account, around 66 million people remain unbanked. As a result, the total transaction value in Mexico's digital payment sector is expected to grow at an annual rate of 9.84% from 2024 to 2028, reaching an estimated US$167.70 billion by 2028.
However, Mexico's payment landscape isn't entirely digital. Cash still plays a major role, and credit cards are widely used, creating a diverse payment ecosystem. Each option, whether digital or traditional, presents unique opportunities and challenges. This mix of payment methods adds complexity to the country's financial landscape, making it an important market to watch.
Payment method distribution
Credit and debit cards
When it comes to e-commerce transactions, credit cards remain the most used payment method in Mexico. However, credit card usage presents two major problems.
Firstly, nearly half of the adult population does not have access to traditional banking services, which exacerbates economic disparities and limits financial opportunities for millions of people. This lack of access prevents a significant portion of the population from participating in the digital economy, hindering overall economic growth and inclusivity.
Secondly, fraud is a serious issue in the credit card landscape. According to KPMG Group, 4 out of every 10 bank cards fall victim to fraud, making Mexico the country with the highest percentage of fraud incidents at 44%. This rate surpasses even the United States, which stands at 42% and is the largest banking payments market in the world.
BBVA
As a leading provider of credit and debit cards in Mexico, BBVA leads the way in card innovation, serving a vast client base of 30.9 million. A key driver of its success lies in its user friendly mobile app, utilized by over 22.9 million of its clients, facilitating more than 68% of its financial transactions seamlessly.
Moreover, BBVA's expansive portfolio of card offerings coupled with its customer-centric rewards programs underscores its commitment to empowering cardholders with a wide range of benefits that go from lucrative cashback incentives to exclusive travel privileges.
Santander
Offering a diverse range of credit and debit cards tailored to meet the distinct needs of its client base, Santander ensures a seamless blend of convenience and reliability for its over 20.5 million customers and 6.9 million online customers.
By empowering customers to select cards that resonate with their lifestyle and financial aspirations, Santander fosters a sense of empowerment and trust in managing their finances effectively.
Banorte
Recognized for its comprehensive suite of credit and debit card options, Banorte remains a trusted choice for over 20 millions de clients seeking reliability and convenience in their everyday transactions.
By empowering customers to select cards that resonate with their lifestyle and financial aspirations, Santander fosters a sense of empowerment and trust in managing their finances effectively.
Digital wallets
As Mexico continues to embrace digitalization across various sectors, digital payments are set to play an increasingly central role in the country's economic development and financial inclusion efforts. With their intuitive interfaces and robust security measures, digital wallets offer users a seamless and convenient way to navigate the complexities of modern finance.
Mercado Pago
Mercado Pago, a flagship offering of MercadoLibre, stands as a beacon of innovation and accessibility in Mexico's digital wallet sphere. The platform has issued over one million credit cards in Mexico, with 30% of them going to first time credit cards owners.
Jorge Cabrera, Director of Mercado Pago Mexico Users, has stated that “the easier the use of a banking app is, the greater is the chance to improve financial inclusion and financial literacy”, and so it’s no wonder Mercado Pago has emerged as a trusted companion for users seeking a user-friendly platform.
PayPal
With over 15 million active users, PayPal has carved out a significant niche in Mexico's digital payment landscape. Catering to both domestic and international transactions, PayPal has emerged as the go-to platform for millions of Mexicans seeking secure and hassle-free payment solutions.
n fact, PayPal's reputation as a beacon of security and trust has propelled it to the forefront of cross-border e-commerce in Mexico, with a staggering 51% of Mexicans choosing it as their preferred payment method for international online shopping.
Cash collection
In Mexico, cash collection remains a vital aspect of the payment landscape, reflecting the country's reliance on cash transactions despite the rise of digital payment methods. Many businesses, particularly in rural areas, continue to depend on cash for daily operations.
OXXO Pay
Leveraging the extensive network of OXXO convenience stores, OXXO Pay revolutionizes the payment experience for users across Mexico. With over 22,000 locations nationwide, OXXO Pay integrates by allowing users to make cash payments for online purchases, adding accessibility through a physical twist to e-commerce.
Furthermore, OXXO's strategic focus on financial inclusion, exemplified by its Spin service, is poised to revolutionize the banking landscape in Mexico. With a staggering 1.2 million new users added between July and September 2023, OXXO is driving unprecedented growth in user numbers.
SPEI
Since its inception in 2004, SPEI has become a symbol of efficiency and reliability, enabling real-time bank transfers for both personal and business purposes. The system's robust infrastructure and stringent security protocols ensure seamless financial transactions, fostering trust and confidence in Mexico's banking ecosystem.
Each payment order in SPEI includes details to identify both the sender and recipient, ensuring transparency and accuracy. As orders enter the system, they are placed in a pending queue and processed in seconds to determine which can be settled with available balances.
CoDi (Cobro Digital)
Launched by the Banco de México, CoDi (Cobro Digital) is a digital payment platform that enables real-time transactions through QR codes, utilizing the existing SPEI infrastructure. This initiative is designed to promote financial inclusion and reduce the reliance on cash.
CoDi allows users to make payments directly from their bank accounts by scanning a QR code, simplifying the payment process for both merchants and consumers. The platform is especially advantageous for small businesses and vendors, as it eliminates the need for expensive point-of-sale systems and reduces transaction fees.
Cash payments
Despite the rise of digital payments, cash remains a vital component of Mexico's payment landscape. Many people, especially in rural areas or those without bank accounts, still rely on cash because of its widespread acceptance and regular use.
In the realm of e-commerce, cash payments continue to hold significant importance through methods such as cash-on-delivery and cash vouchers, where customers can make online purchases and pay in cash at convenience stores or designated payment points.
Looking ahead
Mexico's payment landscape is experiencing a significant transformation, driven by a mix of traditional and digital payment methods that cater to a diverse population. While digital payments are growing, fueled by innovations in mobile technology and digital wallets, cash remains a dominant form of transaction, especially among the unbanked population.
Looking ahead, Mexico is poised for continued growth in digital finance, supported by a strong fintech sector and innovative solutions like CoDi and digital wallets such as Mercado Pago and PayPal. As more people gain access to digital financial services, the shift towards a cashless society may accelerate, enhancing financial inclusion and economic growth.
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