Mexico is a nation with a growing online marketplace. Its retail e-Commerce revenues are expected to grow from 9 billion USD in 2019 to 12.5 billion USD to 2023. It is also a large nation. It made up 19.6% of all LATAM e-commerce sales in 2017. However, this market is not without its challenges. It has one of the largest unbanked populations in LATAM. Only 37% of Mexicans have a bank account. In theory, this would make paying for things online difficult. But Mexico has developed some unique ways to address this. We look at the top three online payment methods, and explain everything international e-commerce merchants need to know about them.
Credit and debit cards
While only 37% of Mexicans may have a bank account, 80% of online customers do. Accordingly, credit and debit cards are one of the most popular online payment methods. Indeed, 63% of purchases in the first quarter of 2019 were made with a debit card. Credit cards show similar popularity. Taken together they showed a 49% increase in usage in 2019.
International e-commerce merchants should be aware that not all Mexican card types allow international transactions. When localizing your checkout, it is important to accept local cards and local payments.
A brief look at installments
Many local cards in Mexico offer payment in installments. They allow the price of an item to be split up into a number of smaller payments, spread over a set time frame. They are also incredibly popular. 9 out of every 10 credit card purchases made online, by people between the ages of 26 and 45 in 2017 were made with installments. In the last five years, Banco de Mexico reports a 100% rise in the use of installments. As such, they are an essential part of checkout localization. Installments can be complicated. Mexicans benefit from a unique option – ‘meses sin intereses’ or months without interest. Customers are offered interest free installments once the merchant has come to an agreement with the issuing bank. In this scenario, the merchant then pays the interest. In light of this complexity, it is essential you partner with a local aggregator, like BoaCompra, to ensure you offer the best installment plans to your Mexican customers.
Oxxo and other cash based payment systems
Anyone who has visited Mexico will be familiar with Oxxo. With over 17,000 points of sale, it is Mexico’s largest chain of convenience stores. However, it also has another function. As a cash based online payment system. Customers who need to pay in cash can simply select Oxxo as a payment method, print off a voucher (identified by a unique serial code) and take it into an Oxxo store to pay for the item. As such, it offers access to the large unbanked population of Mexico.
It is important to note that Oxxo is not the only cash based payment system in Mexico. Other convenience stores like 7-Eleven, F. DelAhorro, F. Benavides, Extra, Waldo´s, El Kiosko, El Asturiano and Círculo K also offer this service. Ensure that you offer a wide variety of these payment methods to broaden your potential customer base.
E-wallets are on the rise
The final, and newest payment method gaining popularity in Mexico is the e-wallet. PayPal will be familiar to international readers. Mexicans also use a local e-wallet, MercadoPago. Total e-wallet use in 2017 accounted for 14% of online sales. The reason behind this is likely the popularity of smartphones in Mexico. It ranks eighth in world smartphone usage. The easy integration of e-wallets with mobile shopping is likely to see this market share increase. Again, ensure your checkout offers both e-wallet types to increase your customer conversion rates.