Why reaching the unbanked in Mexico will boost your e-commerce business
With a population of some 129.2 million inhabitants and being the second largest economy in Latin America, Mexico is an attractive market for international merchants. Some may believe that e-commerce development would struggle with a largely unbanked population, but the Mexican online market has found its own way to grow. This is what we can call the “Mexican Paradox”: the presence of an effervescent online market even with consumers who don’t have a bank account.
As our blog has already pointed out, Mexico is the Latin American prodigy with the fastest growth of e-commerce, a potential very well exploited when business takes into consideration the local reality and solutions that meet its special needs. For instance, alternative payment methods rule the Mexican market, following the trend that can be observed in several other e-commerce markets throughout Latin America.
High unbanked rates shouldn’t scare off international merchants
The case of Mexico, however, warrants attention when the low rate of people using banking services is considered. According to the World Bank report published in 2018, more than half of Mexico’s population doesn’t have bank accounts or use any kind of cards (debit or credit). These circumstances put the country in the fourth lowest position in terms of financial inclusion in Latin America, only above Haiti, Nicaragua and El Salvador.
The same report also states that 36.9% of adults (over the age of 15) in Mexico have an account in a financial institution. This describes a reality that is way below the average in the world and in Latin America as a whole. In contrast, e-commerce grows exponentially! According to the Business Insider report, e-commerce in Mexico can reach a new threshold of USD 11 billion in 2018 and also post a growth of 15.6% by 2019.
Reaching the unbanked with the most appropriate local payments
The secret to reach all this potential is that of considering local payment solutions! For example, Oxxo – the corner store chain – is well known and very popular among Mexican consumers and is present even in the most remote regions of the country, with over 14,000 points of sale available throughout Mexico. Forbes has described Oxxo as the country’s leading e-commerce platform, having successfully implemented a local payment network and a product recall system.
Succeed at expanding your global business into Mexico
Being aware that e-commerce is possible using key local payment options such as Oxxo in Mexico, international merchants should consider having a payment provider that offers the payment methods preferred by unbanked customers.
With this strategic decision and a website with content in Spanish, Mexican online consumers will feel more comfortable buying on your website, thereby boosting your acceptance and conversion rates. BoaCompra, for instance, offers the main cash payments in Mexico – such as the thousands of points of sale from Oxxo, Todito Cash, Farmacias del Ahorro and 7-Eleven - and a wide range of other local solutions.
Local payments make the difference in Mexico
Interested in expanding your business into Mexico? Take a look at our infographic below and get to know the main characteristics of this expanding market.
You can also examine the complete version of the infographic “Payment Methods in Latin America” on our blog. Keep checking our content for further infographics about our available markets.