The author thanks Bernardo Bátiz-Lazo, Gustavo Del Ángel, and Guillaume Lepecq for references and feedback.
Since 2019, the government of President Andrés Manuel López Obrador has promoted the adoption of digital payments and a reduction in the use of Money in physical form such as banknotes and coins. More to promote financial inclusion in Mexico. Mexican authorities define A process by which individuals and businesses can access appropriate, affordable, and timely financial products and services. These include banking, loan, equity, and insurance products. While it is recognised that not all individuals need or want financial services, the goal of financial inclusion is to remove all barriers, both supply side and demand side. Supply side barriers stem from financial institutions themselves. They often indicate poor financial infrastructure, and include lack of ne... More as the “access and usage to formal and adequately regulated financial services that guarantee consumer protection rights and promote financial literacy” (INEGI 2022: 3).
The National Banking and Securities Commission (CNBV) and the National Institute of Statistics, Geography, and Computing (INEGI) have conducted national surveys since 2012 to measure financial inclusion in Mexico. The most recent survey took place between June and August 2021: it comprised 13,352 households, representing 90.33 million Mexican adults.
“Measuring financial inclusion across the population and [obtaining] information on the use of financial products by individuals is an indispensable exercise to identify levels of financial access, usage and inclusion, and financial habits; [to identify] inclusion gaps among different groups; [to map] mexisting barriers and their relation to relevant variables, such as individuals’ socio-demographic characteristics,” said Gustavo Del Ángel, professor of Economics at CIDE.
According to the survey’s results and data (published last May), Mexico’s level of financial inclusion (measured by access to formal financial products) worsened slightly during the Covid-19 pandemic.
Cash in circulation rose a staggering 30.33% from March 2020 to March 2021 before Mexico sourced Covid-19 vaccines. The country’s weak economic recovery with persistent inflation and a likely global recession will undoubtedly reinforce the dominance of cash in Mexico.
Graph 1. Mexico: Adult Population’s Payment Habits, per Payment Instrument and Gender, 2022
The regions with the highest use of non-cash alternatives (payment cards, electronic transfers, checks, prepaid cards, etc.) for higher-value purchases were Mexico City (28.7% of adults), the Mexican Northwest (22.9%), and the Northeastern states (21.5%). Southern Mexicans conspicuously prefer cash: just 12.4% paid with an instrument other than cash for these purchases (INEGI 2022: 25).
In 2021, just 32.7% of adults (27.4 million people) had access to formal credit in Mexico. The Mexican Northwest (41.2%), the Northeast (38.9%), and the Western and Central states (34.7%) had the highest ratios of adults with formal credit. The percentage of Mexicans with credit cards issued by department stores increased from 19.2% to 20% between 2018 and 2021; bank-issued credit cards remained the same, at 11% (CNBV 2022: 14, 16).
A little more than a third of Mexicans (34%) reported knowing about CoDi, the mobile payments platform developed by Banco de México. Although adults in Mexico City (49.3%) were the most aware, only 11.8% had used CoDi (INEGI 2022: 27).
According to Ana Laura Martínez, professor of public policy at CIDE, CoDi’s launch lacked awareness campaigns, rewards for usage, and user accompaniment. Banco de México’s bet on CoDi fell short as Mexican consumers demand information, rewards and prizes to This is the action by which certain banknotes and/or coins are exchanged for the same amount in banknotes/coins of a different face value, or unit value. See Exchange. More their payment habits.
Mexico’s financial infrastructure is insufficient, particularly in the poorest states, including Chiapas, Oaxaca, and Guerrero (see Map 1).
Map 1. Mexico: Average Time Employed to Go to a Bank Branch, 2021 (Minutes)
In the past three years, Mexican increased their usage of ATMs and financial correspondents, whereas they went less to bank branches (INEGI 2022: 24).
Regulators and innovators implement supply-side innovations and products, thinking that demand will arrive eventually, but consumers are not demanding cash alternatives in Mexico (Fundef 2019: 9; Fundef 2020: 22, 33, 36-37). Mexicans remain conspicuous cash users, despite a booming fintech scene with many banking incumbents and startups.
“The above raises a key policy question: should the government subsidize fintech and digital payment providers to increase financial inclusion, or should it provide cash transfers to lower-income groups to lift them out of poverty?” said Guillaume Lepecq, chair of Cash Essentials.