Mexico payments guide

Welcome to Mexico

When planning for global expansion, payments are often last on the list for consideration. But before rushing to localize websites and set up local entities, businesses should consider how their new shoppers might like to pay for their goods or services. Letting customers pay in the ways the know and trust will significantly increase your reach into new markets, which is why we strongly recommend a payments-first approach.

In markets like Mexico, where a high proportion of the population remain unbanked, credit card penetration is very low and most Mexican shoppers prefer to pay using cash-based methods such as convenience store payments.

This guide will walk you through the key features of the Mexican payments landscape, exploring local regulations and key payment methods, to help define your strategy for entering this promising market.

Shopper snapshot

The population of Mexico is the second largest population in Latin America with 122 million residents, 39 percent of whom are considered middle class. It is relatively young, with an average age of just 27.

One-third of this population is estimated to be millenials, which is often a factor in driving the popularity of ecommerce; last year, 56 million people accessed the Internet in Mexico.

Despite the high number of internet and mobile phone users in the country, nearly two-thirds of the population do not have bank accounts.

The mobile outlook

While the sheer volume and age of potential shoppers makes the country an attractive market, there is another component to the viability of Mexico ecommerce: Mexico is mobile.

A recent study shows that Mexico is one of 22 countries leading the trend toward mobile commerce, and young adults made 88 percent of smartphone purchases.

The country has one of the largest mobile markets in Latin America, with one-third of all residents using smartphones. At 18 percent, it boasts the highest percentage of Internet traffic coming from mobile phones in Latin America.

Teens and young adults are the main Internet users, with more than half of Mexico's internet users and mobile phone users belonging to this group.

Payment methods in Mexico

• Cash-based methods
• Bank transfer
• Visa
• Mastercard
• American Express

Ecommerce

In Mexico, 19 percent of consumers shop online at least once a month, and are considered highly educated with the highest reported levels of income. It is estimated that around 24 percent of consumers in Mexico shop online between one and eight times per year and 21.1 million consumers are expected to become online shoppers by 2018.

The numbers of online consumers in Mexico are only expected to grow as access to the Internet becomes more prevalent and the telecom industry supports mobile Internet uptake and digital access. This represents a growing opportunity for cross-border sales, as more consumers access the Internet, especially for digitally savvy international companies. Mexico trade with the US totals $1 billion-plus per day.

Adyen recommendations

Optimizing a payment strategy in Mexico requires a flexible payments partner with local knowledge and capabilities, as well as relevant past experience. Having local knowledge of the intricate bureaucratic requirements can make a huge difference in establishing a presence in Mexico, where Adyen supports all key local payment methods.

Local and cross-border payments

Global companies determining how to structure payments often need to think about using a cross-border or a local approach. For instance, a merchant could choose to use a strictly “cross-border” approach with a central entity accepting payments in multiple countries via a single acquirer.

Or it could use a “local” approach, which would require a local acquirer or an international acquirer with the correct domestic licenses to accept payments.

Merchants can also use a combination of these approaches, implementing a cross-border payment strategy in one country and a local strategy in another.

In general, we recommend local acquiring, since many domestic cards in Mexico are not enabled for cross-border payments. Local processing would therefore increase authorization rates and mitigate fraud issues, especially when it comes to ecommerce.

However, processing payments locally requires separate acquirer contracts, which can create additional internal complexity and related costs.

Cross-border payments are suitable for those merchants who do not wish to invest the time and energy into developing local acquiring relationships. In these instances, we recommend that merchants implement relevant payment methods to optimize their Mexico-specific websites.

You should be aware that card authorization rates in a cross-border scenario may be lower because the transactions will generally be considered higher risk.

Credit cards

Credit cards have a lower penetration in the Mexico ecommerce market than in many other markets. While Visa leads the credit card penetration with 19 percent, Mastercard comes in slightly lower at 17 percent. American Express is often seen as a reflection of high socioeconomic status and spending power.

Mexico is the only country in Latin America that has a significant penetration of AmEx. Installments (Meses sin interés) are also very common in Mexico.

Customers may make a purchase in up to 20 installments; the merchant will receive the settlement with additional costs, depending on the amount of installments offered to the shopper.

OXXO

Cash-based payment methods, including bank transfers and convenience-store payments, represent 46 percent of ecommerce transactions in Mexico. Convenience store, OXXO, is the cash payment leader in Mexico.

Customers pay for their items online and print a voucher, which they then take to one of the 13,000 OXXO locations in the country to pay.