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Ecommerce has lagged in Mexico, in large part because of broad economic factors that prevent many consumers from participating in the digital economy. In recent years, however, the number of payment methods available for online and offline consumers in Mexico has grown substantially, according to a new eMarketer report, “Payment Methods in Mexico: Digital Options Expand, but Cash Is Still King.”
eMarketer estimates that digital buyers make up less than 8% of the country’s total population. In region-leading Argentina, by contrast, digital buyer penetration stands at close to 28%.
Consumers and sellers in Mexico are not necessarily bound to traditional payment methods for online purchasing. A survey from internet industry association AMIPCI showed widespread use of alternative payment methods among people who had made online purchases. Some 60% of respondents said they had used credit cards—the most popular payment method for online purchases in 2012. But alternative payment methods were widely cited, including cash on delivery and “convenience store,” neither of which require a bank account.
In Mexico, cash continues to be key for transactions, online and off. In January 2013, Antonio Junco, general director for Mexico and Central America at MasterCard, was quoted by news agency Notimex as estimating that only 9% of transactions in Mexico are conducted through electronic payment methods, “with the remaining 91% happening in cash.”
Credit card penetration in Mexico is low, and growth, while steady, is slow. According to Banco de México data, the number of credit cards in circulation registered an average annual growth of 1% during the past five years, reaching 25.4 million in Q4 2012. Of those cards, 72.5% were actually used during that quarter.
Debit card issuance, on the other hand, expanded at an average 14% annual rate during the same period, reaching 99.4 million in Q4 2012. But usage was lower during that quarter, with only 47 million debit cards being used, or 47.0% of the cards in circulation at the end of 2012.
Banks have been wary about allowing debit cards to be used for online and phone-based transactions, mainly because of fears of fraudulent activity. But that may be changing thanks to ecommerce and online payment service providers. PayPal has put safety at the core of its Mexico strategy and convinced major local banks to allow such payments.
More advanced mobile payment options are also in development. According to a September 2012 study from Ipsos OTX and Ipsos Global @dvisor, internet users in Mexico expressed interest in making purchases using their smartphones and tablets. The study found 16% of respondents preferred to purchase through mobile phones/smartphones and that 11% preferred to do so via tablets.
Lack of advanced mobile payment methods, however, could be holding purchases back. According to a July 2012 comScore study, roughly one out of four smartphone users in Mexico cited lack of payment methods suited for the advanced mobile device as the reason not to make purchases via their smartphones.
The full report, “Payment Methods in Mexico: Digital Options Expand, but Cash Is Still King,” also answers these key questions:
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