Mexico is emerging as a focal point in global payments. In 2023, Mexico became the United States’ top trade partner, surpassing China. Cross-border transactions are growing, as is the demand for seamless payment integrations in Mexico.

Mexico’s payment system is heavily affected by socio-economic conditions, trade relationships, and global influences. The country presents a dynamic and illuminating study in global payments.

Below, we’ll explain what businesses that want to enter Mexico’s payment scene should know, including key considerations such as:

• Balancing cash payments with digital solutions
  
• Prioritising security
  
• Fostering trust in digital payment methods
  

The state of the market

Mexico’s official currency is the Mexican peso (MXN). Many residents still rely on cash payments – driven by vast, informal economies, and by rural populations that lack access to digital options. In 2021, 63% of adults in the country didn’t have a bank account, according to the World Bank.

However, the use of digital payment methods continues to expand, with the total transaction value projected to have a compound annual growth rate of almost 10% between 2024 and 2028.

As of 2024, the Mexican fintech environment included 773 startup fintech companies, an 18.9% increase from 2022. These include Konfio (business lending), Kueski (consumer lending/BNPL solutions), and Clip (payments), companies that have gained traction by offering innovative financial payment solutions that cater to the underserved segments of the population. Over 217 fintech companies from more than 22 different countries operate in Mexico. For context, between 2019 and 2022, the use of credit cards increased in Mexico by 75%, while the use of debit cards increased by 50%.

In recent years, the Bank of Mexico has launched two platforms to reduce its dependence on cash. Launched in 2023, Dimo (“Dinero Móvil”, or “Mobile Money” in English) allows users with a bank account to make payments through instant bank transfers via the Sistema de Pagos Electrónicos Interbancarios (SPEI) – an electronic payment system operated by Mexico’s central bank – by using the payer’s and recipient’s phone numbers. Cobro Digital (CoDi), launched in 2019, is a state-backed digital payment system that facilitates real-time electronic payments through QR codes and near-field communication (NFC) technology.

The country’s financial sector is regulated by several different bodies. The Bank of Mexico, also known as Banxico, is the country’s central bank and crafts monetary policies while overseeing Mexico’s financial stability. With international reserves of $204 billion USD in 2023, Banxico plays an important role in Mexico’s economic environment.

The Comisión Nacional Bancaria y de Valores (CNBV, and the “National Banking and Securities Commission” in English) is the chief regulatory body that supervises and regulates banks, broker-dealers, insurance institutions, fintech entities (including e-wallet and crowdfunding platforms), and participants in the securities market. Mexico’s Financial Technology Institutions Law (known as “Fintech Law”) was enacted in 2018 and marked a significant step in regulating and promoting the fintech industry, laying the groundwork for secure and progressive financial innovation. The most relevant provisions under the Fintech Law regulate e-wallets and crowdfunding platforms, while also establishing a general regulatory framework for sandbox, open banking, and virtual assets.

Payment methods

In Mexico, residents and visitors rely on several different payment methods for day-to-day transactions and larger purchases. Here’s a closer look at the primary methods.

Current usage

Although the use of technology-driven payment methods is growing with the urban population and younger consumers, cash remains the most popular form of payment. Before the COVID-19 pandemic, 88% of transactions were made with cash, but that figure decreased to 82% by 2022, and to 80% by 2023. This strong preference for cash comes from several factors, including a sizable population without bank accounts, a large informal economy, and concerns about online security. According to a 2021 survey by the INEGI, the National Institute of Statistics and Geography, 90.1% of the population between 18 and 70 years of age uses cash for purchases of 500 pesos or less. For purchases of 501 pesos or more, 78.7% of the population ages 18 to 70 uses cash and 12.3% uses a debit card.

The adoption of digital payments was initiated by the arrival of third-party services that allowed businesses to accept online payments in Mexico in 2014. Aggregators have also driven an increase in credit and debit card usage, with a 55.4% compound annual growth rate for point-of-sale (POS) terminals that accept card payments.

Credit card usage is rising in Mexico, due in part to financial tools such as “meses sin intereses”, which allows customers to pay for credit card purchases over multiple months without interest.

Popular B2C payment methods in Mexico

• Cash
  
• Credit cards
  
• Buy now, pay later (BNPL, or “meses sin intereses”)
  
• Bank transfers (using SPEI)
  
• Debit card payments
  

Popular B2B payment methods in Mexico

• Bank transfers
  
• Credit cards
  
• Direct debits (linked to a credit or debit card)
  

Emerging trends

Although cash is still a common payment method in Mexico, digital payments have seen a steady increase every year since 2017. OXXO, a payment method that gives customers the option to pay for online purchases in cash at a physical OXXO shop, combines digital and non-digital methods.

As mentioned above, the Bank of Mexico launched Dimo in 2023 to facilitate bank transfers. Instead of providing a bank account number for a bank transfer, users can provide their phone number, which must be linked to a deposit account.

Similarly, CoDi – a mobile payments platform developed by the Bank of Mexico – is expected to increase mobile payments by facilitating interbank electronic transfers in real time using QR codes.

However, INEGI’s 2021 National Survey of Financial Inclusion found that while 34% of the Mexican population ages 18 to 70 reported knowing about CoDi – a number that rises to over 49% in Mexico City – just 8.3% of respondents had used the payment platform.

Ease and friction of entry

Businesses that want to enter the Mexican payment market should consider the following factors:

Taxes

The value-added tax (VAT) in Mexico, known as “IVA” (Impuesto al Valor Agregado), affects consumers and businesses. As of 2024, the standard IVA rate in Mexico is 16% for most of the country, with a reduced rate of 8% in regions near the US border. Businesses are responsible for collecting and turning over these funds to the Mexican tax authority. Non-compliance or irregularities in IVA collection and remittance can have legal implications.

Chargebacks and disputes

As in other regions, businesses in Mexico face challenges around chargebacks and dispute resolutions. The influence of local consumer protection laws and regulations makes the environment more complex.

International payments

Here’s what you should know about international payments in Mexico:

Currency conversion

The Bank of Mexico, which mandates transparency around exchange rates and fees, oversees currency conversion in the country. The bank also publishes daily exchange rates, which serve as a reference for other banks and financial institutions.

Tourists and business travellers in Mexico typically convert their home currency into the Mexican peso in venues such as airports or currency exchange businesses. ATMs also allow customers to withdraw money in both Mexican pesos and popular foreign currencies such as the United States dollar or the EU euro, usually for a service fee.

Digital platforms such as XE Currency and Wise (formerly TransferWise) have also reshaped the currency conversion landscape in Mexico. These platforms provide live updates, competitive rates, and transparent fee structures – making cross-border transactions more affordable for individuals and businesses.

Remittance flows

Remittances play an important role in Mexico’s economy. With a large population of Mexicans living abroad, especially in the US, Mexico is one of the world’s top recipients of remittances. The World Bank estimates that remittances to Mexico reached $61.1 billion USD in 2022. This has led to the development of specialised payment channels and services to facilitate these transactions, similar to economies such as those in the Philippines or India.

Cross-border payments

Mexico’s large expat population and strong trade ties with countries such as the US result in a substantial number of cross-border transactions. These transactions come with challenges related to currency conversion, differing payment preferences, and divergent regulatory requirements.

Security and privacy

Mexico has a multi-faceted approach to security, compliance, and regulation in the financial sector that provides a stable environment for consumers and businesses. As digital payments and online transactions continue to grow in popularity, understanding Mexico’s robust payments framework is key for businesses.

• Data protection laws
  Mexico’s Federal Law on the Protection of Personal Data Held by Private Parties requires any organisation collecting personal data from Mexican citizens, including financial data, to have explicit consent from the individual. The law also grants citizens the right to access, correct, and remove their personal data, which aligns closely with principles found in the European Union’s General Data Protection Regulation (GDPR).

• Anti-Money Laundering (AML) laws
  There are two general regulatory frameworks in Mexico around anti-money laundering:

  • AML Laws for financial entities: This applies to regulated financial institutions such as banks, non-banks, warehouses, money transmitters, investment companies, credit unions, e-wallets, crowdfunding platforms, etc. Each type of financial institution has its own applicable AML law.
    
  • The Federal Law for the Prevention and Identification of Transactions with Funds from Illegal Sources: This regulates individuals and entities engaged in non-financial “vulnerable activities”. The purpose of the regulation is to protect the financial system and the national economy by establishing measures and procedures for non-financial entities to prevent and detect acts or operations involving illegal resources.
    

• Adhering to PCI DSS
  Businesses and payment platforms that deal with credit card transactions in Mexico are required to comply with the Payment Card Industry Data Security Standard (PCI DSS). This global standard outlines best practices for storing, processing, and transmitting cardholder data, which significantly reduces the risks associated with financial fraud.

• Protecting customers
  The Federal Consumer Protection Agency (PROFECO) oversees the Mexican Consumer Protection Law, which establishes the rights and obligations of consumers and vendors in electronic commerce. This includes transparent advertising, the right to information about the terms and conditions of a sale, and clear mechanisms for refunds and returns.

Key success factors

Mexico’s payment environment contains both opportunities and challenges. Understanding these challenges is pivotal for businesses looking to navigate and succeed in the Mexican payment market.

• Cash-focused payment options
  Despite consistent growth in the number of Mexicans who use digital payment methods, the market share may be expanding more slowly than other markets. For businesses, continuing to accept cash payments alongside mobile payments can help bridge the gap between populations that are more reliant on cash and those comfortable with digital payments.

• Effective payments infrastructure
  Ensure your payment service provider delivers a high authorisation rate as credit card usage rises in Mexico. High authorisation rates can prevent lost sales in the moment, as well as prevent the loss of future sales from customers who have their payments declined.

• Cybersecurity at the forefront
  In 2018, the Mexican banking sector experienced a cyberattack that led to a loss of approximately 300 million pesos across five financial institutions. Such incidents emphasise the need for robust cybersecurity measures, including advanced fraud detection and prevention systems.

• Supporting local payment preferences beyond cash
  Similar to Brazil’s Boleto Bancário or Argentina’s Rapipago, Mexico’s OXXO is a cash payment method that supports the significant population who do not have a bank account. By allowing online shoppers to pay in cash at physical locations, OXXO bridges the digital divide and opens up e-commerce opportunities.

• Embracing fintech innovations
  Mexico’s burgeoning fintech scene is democratising access to financial services. This growth is similar to that of Southeast Asia or Africa, where fintech startups are bridging gaps in traditional banking structures and offering alternative payment solutions.

Key takeaways

As Mexico experiences an increase in e-commerce and a push toward digital transformation, understanding and aligning with local payment habits can create a more seamless experience for customers. Here are strategies businesses in Mexico can adopt to optimise the payment experience:

Balancing cash payments with digital solutions

• Accept mobile payments
  Mobile payment methods such as Dimo are changing the payment environment. Adding these payment options can offer customers a familiar alternative to paying with cash.

• Support the unbanked population
  According to data from the World Bank, only 37% of Mexican adults have a bank account as of 2021. This low banking penetration rate emphasises the need for both digital and cash-based solutions. Moreover, limited access to digital tools and training can hinder the adoption of online payment systems among certain demographics.

• Embrace popular local payment methods
  In Mexico, about 9 in 10 consumer transactions of 500 pesos or less were conducted using cash as of 2021. This provides opportunities for cash-based digital payment solutions such as OXXO, which allows online shoppers to pay for their purchases in cash at any OXXO convenience store. Incorporating such methods can bridge the gap between online shopping and cash preferences, but it can also present challenges in transaction traceability, security, and efficiency.

Prioritising security

• Invest in robust security protocols
  Consumers in Mexico are becoming more discerning about online security. Employing advanced encryption techniques and adhering to international security standards can help mitigate risks and build trust.

• Stay updated on regulatory changes
  Mexico’s Fintech Law provides a structure for digital payment services, and staying compliant with evolving regulations ensures business continuity and builds trust among consumers.

• Adapt to regulatory changes
  The 2018 Fintech Law created a comprehensive framework for digital financial services, including payments, and it has been deeply influential in regulating the sector. Understand the implications of the law on your business while keeping a close watch on regulatory changes. Adapting to new rules and ensuring compliance can be resource-intensive for payment providers.

Fostering trust in digital payment methods

• Implement a transparent refund process
  Mexico doesn’t have a nationwide mandate on return policies, but offering a clear and prompt refund procedure can enhance the customer experience and build loyalty and trust.

• Provide top-notch customer support
  Although Spanish is the country’s predominant language, providing bilingual support – especially in areas with a high concentration of tourists or expatriates – can enhance the payment experience for a broader audience.

• Engage with local traditions
  Tuning into local events or holidays – such as “El Buen Fin” (Mexico’s equivalent of Black Friday) – as an opportunity for promotions and discounts can boost customer engagement, increase transaction volume, and build customers’ comfort with digital payment solutions.