Cross-Border Payments to Boost Mexico's E-Commerce

Cross-border payments are becoming a critical role in the expansion of global e-commerce, with Mexico emerging as one of the fastest-growing markets in this area. Increased financial inclusion, the rise of digital payment systems, and a growing middle class in emerging markets are the main factors driving the expansion. 

In the coming years, cross-border payments are expected to grow at a compound annual growth rate (CAGR) of 24% in emerging markets, with sectors like sports betting, video games, and online travel gaining significant traction. In Mexico, cross-border e-commerce accounts for 20% of total e-commerce transactions, driven by the country’s proximity to the United States, according to Canadian fintech Nuvei. This is a stark contrast to Brazil, where just 7% of e-commerce is transnational. 

“Instant bank transfers will be used more than credit cards for e-commerce, so it is key to implement a payment system that includes all options,” said Javier Guerrero, Country Manager of Mexico, Nuvei, during a press conference. Systems like Brazil’s PIX, Colombia’s PSE, and India’s UPI have revolutionized payments by offering faster, more accessible solutions. In Brazil, PIX is now used by 90% of the adult population, and UPI in India processed 100 billion transactions in 2023.

For instant cross-country payments, the safety of financial information and the possibility of fraud have become a concern for issuers and the final user. To combat this, many companies have turned to blockchain technology and tokenization, “a key tool for the safety of operations,” said Guerrero to MBN. 

Tokenization transforms an account number into a secure, indecipherable electronic code, which only the issuing bank can interpret. “In the past, many consumers hesitated to share their card numbers on websites, fearing theft and fraudulent charges. Today, tokenized payment systems address these concerns, offering a safer way to shop and travel online,” explained Guerrero. This technology’s adoption is especially relevant in regions where digital transactions are on the rise.

As the population becomes more familiar with mobile payments and digital wallets, the volume of international transactions is increasing. Emerging markets have experienced a surge in e-commerce activity, fueled by a growing tech-savvy workforce and improved access to financial services. In Latin America, financial inclusion has increased from 40% to 75% in the past decade, and Mexico, despite its continued reliance on cash, has seen greater access to digital accounts, says Nuvei. 

“Payments are becoming more verticalized and specialized by industry,” said Guerrero. This trend toward specialized payments tailored to specific industries has become crucial, as businesses look to integrate personalized solutions that fit merchant's and consumer's needs.

The adoption of real-time payment systems is expected to continue growing due to the convenience and efficiency of instant payments and financial inclusion. With more than 6.8 billion people living in emerging markets, these areas could see the addition of 113 million new consumers by 2024, with over 70% of these newcomers coming from developing economies, according to the company’s report.