Mexico: ¿Hola digital, adiós cash?
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Fighting tax evasion and money launderingThe operation of attempting to disguise a set of fraudulently or criminally obtained funds as legal, in operations undeclared to tax authorities, and therefore not subjected to taxation. Money laundering activities are strongly pursued by authorities and in most countries, there are strict rules for credit institutions to cooperate in the fight against money laundering operations, to declare and report any transactions that could be considered suspicious. More through cashMoney in physical form such as banknotes and coins. More ban
Mexico’s federal government is considering banning cash when purchasing gasoline and paying toll fees. Although the plan has yet to be fully approved, insiders told Bloomberg that the plan aims to fight tax evasion and moneyFrom the Latin word moneta, nickname that was given by Romans to the goddess Juno because there was a minting workshop next to her temple. Money is any item that is generally accepted as payment for goods and services and repayment of debts, such as taxes, in a particular region, country or socio-economic context. Its onset dates back to the origins of humanity and its physical representation has taken on very varied forms until the appearance of metal coins. The banknote, a typical representati... More laundering since electronic payments can be more easily tracked. They say it could also help increase government revenue by widening the tax base while also benefiting banks. At the same time, industry executives at Mexico’s central bank (Banco de Mexico) announced that the country is ready for a ‘mostly cashless’ economy by 2025, with business leaders including Laura Cruz of Mastercard Mexico and Luz Adriana Ramírez, CEO of Visa Mexico believing that cash could fully disappear from the economy.
But with 42 million Mexicans lacking bank accounts, what’s the impact of a cash-free society for the average person?
Mexico’s latest electronic paymentA transfer of funds which discharges an obligation on the part of a payer vis-à-vis a payee. More system
Mexico’s new government sees financial technology as an opportunity to bridge the poverty gap and extend financial inclusionA 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 amongst citizens. The central bank announced in February the launch of its latest electronic payment system, the Cobro Digital (CoDi), which is designed to reduce the use of cash by allowing customers to make free payments online and in person through smartphones, using QR codes.
Data collected in 2017 by The World Bank show that only 37% of Mexicans have bank accounts. The number of account holders has even declined from 40% in 2014 to 37% in 2017. Physical money is still predominantly used across society with 80-90% of transactions made in cash, previous Finance Minister Arturo Herrera said in March this year.
Reuters identifies two major hurdles: poor telecommunications infrastructure in remote areas and a lack of trust in the banking system. This is illustrated by the story of coffee farmer Martin Romero, who comes from a small town in the state of Oaxaca that has no bank branches. Paid in cash, he doesn’t earn enough to save or borrow for large expenses – and stands as a prime example of many more who cannot imagine the idea of letting go of physical cash.
According to Cardtronics’ Global Cash Index™,
- Mexico has an average of 7 ATMs per 100,000 people, considerably lower than Brazil (84.7 ATMs per 100,000 people), which also saw a decline in ATM installations.
- Mexico’s population also has a low rate of access to bank branches, with 3 bank branches per 100,000 people.
- Mexico has a large underbanked population – only 14 percent of citizens receive income through direct deposit to a bank account.
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