Payments in Mexico 2017: What Consumers Want
Cash remains the preferred form of consumer payments, especially among the rural population, primarily due to limited knowledge of payment cards or limited access to banking infrastructure. Cash is primarily used for making small-value payments at retailers, and for the payment of utility bills, taxes, and transport fares. A significant proportion of the population is engaged in informal activities, including farmers, street vendors, domestic servants, and self-employed workers. The payment card market is growing strongly but not explosively, and the current trends make a major shift in the future unlikely.
Government has identified access to financial services as a top priority, and has encouraged initiatives that make bank accounts essential for every individual. In this regard, Banco de México has directed banks to simplify the process of opening bank accounts, making access to basic banking products such as bank accounts and debit cards easier. Debit cards have grown in prominence on account of the introduction of electronic payroll services, an increase in the banked population, and the government’s distribution of social welfare funds through payment cards.
Credit card market is likely to be affected by Donald Trump’s victory in the US presidential election. Consequently, banks are cutting credit card exposure to counter a potential rise in consumer defaults and the risks of an economic shock should the new US government restrict trade and business with Mexico. Banks are therefore reducing credit card spending limits and raising the consumer lending standards. Banks’ profits would suffer if the US government scraps the North American Free Trade Agreement (NAFTA).
Mexico’s POS terminal network recorded strong growth from 2013 to 2017, although Mexican consumers remain underserved in general. The majority of merchants are small-scale “mom and pop” operations, and as such are generally resistant to investing in expensive POS hardware, particularly when cash use is so widespread. Mobile point of sale (mPOS) devices will be critical in extending electronic payment acceptance to these merchants due to their lower cost and general ease of use for smaller businesses, which in turn may drive up card usage.
The report Payments in Mexico 2017: What Consumers Want, examines the consumer payments market in Mexico, considering payment cards, online payments, P2P payments, and newer payment technologies such as mobile wallets and contactless.
In particular, this report provides the following -
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