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Emergent Payments

Mexico - Emergent Payments - Digital Payments Solutions

Key Ingredients with Abhishek – Mexico

Mexico - Emergent Payments - Digital Payments Solutions

It’s known for hot food but Mexico’s digital market could be even hotter. EP’s CTO on how the country is moving away from cash and why he ordered insects for dinner.

Mexico’s payments landscape is dominated by cash. What is being done to change this?
The market is at a key inflection point. More than 80% of transactions happen in cash, but the government is pushing to speed up the adoption of digital payments and is making key partnerships to do so. Last year, Mexico joined the UN-based Better Than Cash Alliance. Just last month, Mexico City announced plans to work with MasterCard to help digitally upgrade its city. We saw constant efforts to digitize the unbanked and offer products that can digitize cash. Mexico is on the cusp of a breakthrough with a good alternative to cash.

What were the key payments observations you made during your trip?
1. The 30 million locally issued credit cards have the longest history and best conversion rate for first-time and recurring purchases
2. All 100+ million debit cards can now be used to transact online for first-time and recurring payments (with very few exceptions) and SPEI bank transfers are growing
3. You can choose Oxxo on the website, print out the voucher and then go to any Oxxo convenience store and pay for your product with cash. Other convenience stores are also in play, including 7-Eleven and Circle K.
4. Other exciting payment types like AT&T balance have come up and are being offered on iTunes
5. Paypal is also there and Uber accepts it with cards
6. Wallets have not started in a big way – Mercado Pago wallet is doing ok on sites like Mercado Libre (local version of Amazon/eBay)

How did you see consumers responding to payments digitization?
With over 100 million debit cards and over 30 million credit cards in circulation we are seeing progress on local cards for digital payments and subscriptions. Samsung Pay and Apple Pay are starting to be used – although we couldn’t pay for my Uber using Apple Pay. But there is still a lot that needs to be done. The most intriguing fact is the strong affinity for cash by merchants, as well as consumers. It would be interesting to see whether a mobile operator driven wallet (like M-Pesa) or whether a QR code driven wallet (like Alipay or PayTM) could help digitize consumers.

Why is Mexico an attractive market for US-based merchants?
The size and scale of opportunity is humbling. Mexico’s ecommerce market is gaining momentum. This is largely thanks to strong internet penetration, smartphone adoption and a large and youthful population. The majority of digital purchases made are cross-border transactions, primarily from the United States. We know consumers are receptive to American goods and services and international retailers are paying attention. Recently, Amazon launched its Prime delivery service in the Mexican market and Walmart increased its investment.

And finally, we hear there was no Tex Mex for you, instead some dishes you wouldn’t find close to home…
We are spoiled in California with great Mexican food, so we both felt like we needed to up the ante! First on the table was escamoles or ant eggs. It’s a dish native to Central Mexico once considered a delicacy by the Aztecs. You could easily mistake it for corn or pine nuts – it actually kind of has a nutty taste. Next up was BBQ worms – also known as fried gusanos. Still don’t know how to feel about this one – there is no mistaking it, they look like worms and took a while to chew. Some of our more familiar options were avocado pizza, grilled octopus, Baja oysters and some amazing pre-Hispanic foods eaten by Aztecs and the Mayans before the Spanish came over.