Mexico is the second largest e-commerce market in Latin America and boasts a payment landscape as diverse as its culture, blending traditional and modern methods. However, despite efforts to minimise cash circulation, a significant proportion of Mexico's almost 130 million people remain underbanked.

The reliance on cash in Mexico has outlasted many other countries in Latin America – but it is expected that the country will be the next frontier for cashless payments in the region. Below we analyse changes taking place and the opportunities they create. 

Despite the availability of cashless payment options in Mexico, cash still dominates transaction volumes in 2024.

Almost half of Mexican households still do not have a bank account, relying exclusively on the cash-based economy for their purchases. This is partly due to problems with online connectivity, lack of trust and fear of fraud or lack of transparency.

Cash on Deliver (COD) is particularly popular in Mexico as it facilitates a seamless transaction for purchases made online, but the transaction is usually completed using cash.

While physical money still accounts for an estimated 44% of consumer transactions in Mexico, its usage is steadily declining as other payment methods begin to gain traction.  

Mexico’s payments industry is witnessing several emerging trends that are set to shape the future of the market. Digital payments, including mobile payments and e-wallets, have started to gain popularity, boosted by the widespread adoption of smartphones and improved internet connectivity.

These digital payment solutions offer consumers a host of features that make transferring money and purchasing goods more convenient, as they can complete person-to-person transfers, bill payments and in-app purchases easily.

The overall payments market, encompassing digital wallets, is set to grow from $103.37 billion in 2023 to $167.85 billion by 2028, at a combined annual growth rate (CAGR) of around 10%. This growth underscores the growing significance of digital wallets in Mexico’s payment ecosystem.

In addition to digital wallets, there are other payment alternatives gaining momentum such as buy now pay later (BNPL) and instant payments. BNPL payment adoption is expected to grow steadily over the forecast period, recording a CAGR of 32% from 2023 to 2028.

Meanwhile, the real-time payment market in Mexico is predicted to grow at a rate of 8.6% from 2022 to 2027, indicating a significant portion of the Mexican population is embracing this swift payment method.

There has also been a notable surge in the adoption of payment cards. The Mexican cards and payments market totalled $157 billion in 2023, and is expected to continue growing with a CAGR of more than 13% to 2027.

When it comes to shopping online, both credit and debit cards are on an upward trajectory.

In the first seven months of 2024, debit cards represent around 59-61% of Mexican volume. According to CONDUSEF, Mexican cardholders preferred paid e-commerce transactions in 2023, with debit cards representing 69.6% of total transactions, but the average ticket is less than half that of a credit card (average $27 per transaction).

Credit card use and popularity also on the rise. It is underpinned by their ability to give consumers greater financial flexibility.  This represents a significant move away from cash and could be a vital stepping stone for consumers into new payment options.

It’s clear that there is a willingness among local consumers to explore alternative digital payment methods, driven by their convenience and speed. Current trends suggest Mexico can expect a continued surge in digital payment adoption.