By JUAN DE JESÚS BREENE
Someone asked me recently if cash was still the main form of payment in Mexico.
And just like the answer to other broad and vague questions, when
assessing whether cash is still king in Mexico, the answer is yes … and no.
At the height of the covid-19 pandemic, the Mexican government, in conjunction with the Central Bank of Mexico (Banxico), launched its own version of Apple Pay, called CoDi, short for Cobro Digital (Digital Pay).
The concept of CoDi is relatively simple: Anyone with a bank account and a cell phone can become a cashless consumer.
As is commonplace in many other countries, to use the app, the consumer only has to bring his phone into proximity with an optical reader.
The idea of introducing CoDi was to reduce the use of cash.
But like many great “solutions” dreamed up by governments, this one has not really caught on.
In fact, three years after its implementation, there has been no significant reduction in the use of cash.
The system itself is considered top-shelf, but planners seemed to have not considered a small detail.
According to statistics from the government’s National Institute of Statistics and Geography (Inegi), while there has recently been a slight increase in the percentage of the population with a bank account, even today, barely 49 percent of Mexicans have one.
Ambitions to create a cashless society are inevitably doomed if only half of the population banks with an approved financial institution.
And, according to Inegi, for purchases of 500 pesos or less, nine out of 10 Mexicans used cash in 2021.
Businesses have also been slow to come on board. Even giant online sales companies like Uber and Amazon have had to adapt to the Mexican market, finally giving in and offering a purchase option that is not card-based.
And, of course, by having a customer pay in cash, there is no digital record of a sale, and thus no need to make a legal declaration in terms of taxes.
What has gained ground in Mexico are the mini-card readers like ClipPlus and Zettle. Rather than establishing a business contract with an established bank to accept plastic, along with a commission of the sale going back to the bank, these third-party services demand a significantly lower take, offer the consumer deferred options and even accept payroll supermarket cards.
They also offer small businesses some credit options that would be out of reach with a mainstream bank.
So, yes, cash is still king in Mexico, and will be without universal access to banking.
That old saying that “Mexicans don’t have a culture of saving,” while true, can easily be explained by the fact that most of the population lives hand-to-mouth, barely breaking even on their weekly or biweekly salaries.
What is interesting is how even small businesses now are willing to offer customers the option to pay with plastic. Places that most of us are used to using cash at, such as barbershops, markets, tiny fonda restaurants and the like, now are willing to let customers pay with plastic.
Even if most of those customers still prefer to pay in cash.