Understanding the Current Landscape of Digital Financial Services in Mexico
In Mexico, the expansion of digital financial services faces multiple barriers: lack of connectivity, preference for cash, an informal economy, and low financial literacy. These obstacles prevent the promised digital financial transformation from translating into genuine inclusion and social benefits.
Banxico’s Proposal: Setting Maximum Rate Caps
The Banco de México (Banxico) has proposed setting maximum rate caps on the discount rates that businesses pay to accept card payments. These commissions, which cannot be passed on to consumers, include the utility of aggregators (like Clip or Mercado Pago), the interchange fee paid to the card-issuing bank, and other processing costs.
While exact fees are confidential, Mexico is considered among the countries with the highest aggregator utilities in the region. Some aggregators charge businesses up to 5% of the transaction value, with banks retaining around 2% as an interchange fee. The proposed new caps by Banxico—0.31% for debit and 0.61% for credit—represent positive transformative change but could drastically reduce incentives for card issuance, leading to counterproductive effects.
Scope and Implications of Banxico’s Proposal
Banxico’s proposal not only sets the interchange fee but also allows authorities to adjust any other commission, rate, or charge for card payment services if deemed non-compliant with established principles. This opens the possibility of limiting not only interchange fees for card-issuing banks but also for all participants.
- Incentivizing Digital Adoption: Reducing costs for businesses encourages more establishments, including smaller ones, to adopt digital payment methods, combating the preference for cash.
- Formalizing Informal Businesses: Lower costs facilitate informal businesses’ migration to digital schemes, reducing the informal economy and expanding financial inclusion.
- Building Trust: The measure makes the promise of lower commissions tangible, generating confidence and perception of benefit for users and businesses.
- Promoting Transparency: The obligation to report all commissions to Banxico, which will then publish aggregated data for consumer comparison, fosters transparency.
- Leveling the Competitive Playing Field: The proposal may alter market balance, opening space for new fintech competitors against traditional dominant banks.
Addressing Remaining Barriers
However, capping rates alone won’t resolve all barriers: Insufficient connectivity in vast regions limits mobile payment adoption, even with lower commissions. Inadequate financial literacy and digital skills persist, as many users may not know, trust, or understand these payment methods. Additional user costs, such as ATM withdrawal fees, minimum balances, or switching between institutions, also remain.
UNIFIMEX proposes complementing this initiative with a comprehensive policy: expand connectivity infrastructure, integrate financial and digital literacy programs into the curriculum, offer incentives for business formalization, and strengthen regulations ensuring interoperability, transparency, and user mobility.
Key Questions and Answers
- What are the current barriers to digital financial services in Mexico? The main obstacles include insufficient connectivity, preference for cash, an informal economy, and low financial literacy.
- What does Banxico’s proposal entail? Banxico proposes setting maximum rate caps on discount rates that businesses pay for accepting card payments.
- How will this proposal impact digital financial inclusion? The proposal aims to incentivize businesses to adopt digital payment methods, formalize informal businesses, build trust in digital finance, promote transparency, and level the competitive playing field.
- What additional measures are needed to overcome remaining barriers? Complementing Banxico’s proposal with a comprehensive policy addressing connectivity, financial literacy, business formalization, and regulatory transparency is essential.
