Héctor Cárdenas
Founder and CEO

Close the Circle to Boost E-Commerce

Wed, 02/21/2018 - 15:17

According to the National Report on Financial Inclusion, 82 percent of Mexican adults do not have a credit card, let alone engage in e-commerce activities. Financial technology aggregator Conekta says this represents a wide-open opportunity for like-minded businesses. “We are a technology and security company that is solving an existing problem with our offering of banking products,” says Héctor Cárdenas, the company’s Founder and CEO. 

Cárdenas says the only way to grow e-commerce activities in Mexico is to close the circle and address all the loose ends that still exist, providing incentives for people to buy products online. “You need to work with both sides of the equation: users and businesses. It is important to provide users with the confidence that their product will be delivered and to provide businesses with a secure payment system,” he says. 

Offering safety has been Conekta’s mission. Its solution allows companies to accept and process online payments using two options: an API version that allows companies to integrate Conekta’s solution in a personalized manner and through several plugins that SMEs tend to favor. 
Individuals are another matter altogether. A large number of Mexicans do not have access to banking services and credit cards. According to Cárdenas, 61 percent of Mexicans do not have access to any sort of banking service. With 82 percent of adults not having credit cards, this means that regardless of the advancements made in payment services, only around 20 percent of the country’s adults would benefit from e-commerce. 

Conekta’s answer is OXXO Pay. In September 2016, the startup, founded in 2011, raised US$6.6 million from FEMSA and venture capital funds to develop the solution that allows people with no credit card to buy online. Instead of using a credit card, OXXO Pay provides a 14-digit reference that customers can use at any of convenience store chain OXXO’s 14,695 locations. Conekta notifies the business of the payment in real time. “It is an alternative product that allows you to emulate credit card payments,” says Cárdenas.

The product extends beyond the payment infrastructure. “We started with a solution that enabled companies to receive online payments but we realized that it was not the only problem the Mexican market was facing. Fraud and chargebacks, or friendly fraud, are also very usual problems,” says Cárdenas. OXXO Pay averts both: “Since the client goes physically to OXXO to pay, there is no possibility of chargeback.” Chargeback, also known as friendly fraud, occurs when someone makes a purchase on their credit card then requests a chargeback or refund from the bank instead of the merchant, even though they have received the merchandise. 
For e-commerce to take hold in Mexico, it needs to overcome not only infrastructure but cultural constraints as well, which include a lack of trust in payment systems. Conekta, ensures that all the data is managed following the strictest security standards. “We have certifications that allow us to store all our clients’ sensitive information with the highest security standards in terms of encryption,” says Cárdenas. 

Though much has been done in terms of developing the e-commerce market in Mexico, there is still a long way to go. Cárdenas says that in 2016 in Latin America, a total of US$66 billion of products and services were commercialized via e-commerce. Mexico accounted for US$11 billion. Also in 2016, online retailer Amazon registered net global sales of almost US$136 billion. Cárdenas says that the fact that one company alone processed in payments double that of Latin America and 10 times more than Mexico is a sign that there is still great room for growth. 
But furthering e-commerce in the country requires businesses to understand that it is not a panacea.

“We need to stop creating online stores just for the sake of doing e-commerce. It needs to make sense and offer a better added value,” says Cárdenas. “That is part of what happens with SMEs. They get excited and launch their online store and then nothing happens. We have to help them to be more efficient.”