Development Opportunities in Mexican E-commerceBy Sofía Hanna | Wed, 12/16/2020 - 17:23
Mexico has seen major advances in e-commerce since COVID-19 started as a safer and more time-efficient shopping choice. The pandemic forced businesses and countries, in general, to develop online shopping platforms as a way to maintain their business afloat. It has not been an easy transition considering certain barriers that Mexico was not ready to face, including logistics and internet connectivity, which approximately only 70 percent of the population has access to, according to El Economista. This accelerated transition has been called a "hasty future" as Mexico evolved the equivalent of two years in digital terms, according to market analysis house Nielsen IBOPE.
Currently, the Mexican digital market has a value of approximately US$ 31 million, according to El Economista. Still, when compared to digital markets like the one in Brazil, worth US$ 112 million, Mexico falls short. So, the question is, what is the country missing? Director of LatAm Expansion and Strategic Alliances at EBANX Juliana Etcheverry said there are two areas that Mexico could address to reach higher levels of revenue and productivity. The first one is government initiatives regarding the laws to Regulate Financial Technology Institutions and digital payment systems. The second one is the normalization of digital payments.
"The next step (in digital payments) will be the union of banks with fintech companies. They are relatively small, new companies, with young people with great creativity and great technological capacity who want to venture into means of payment, savings and credit services," said Luis Niño de Rivera, President of the Association of Banks of Mexico (ABM).
“Cash payments are a cultural practice in the region and I honestly do not think we are going to eliminate them anytime soon," said Etcheverry. Still, there have been attempts in Mexico to start a digital payment transition. A previous MBN article addressed Banxico’s new payment system CoDi, which objective is to "boost financial inclusion since no commissions, initial deposits or minimum balances are needed," as mentioned by Rodrigo Kuri, General Director of Citibanamex. The transition will have its challenges but generating this sort of change in the way economies are handled can help small and big businesses during the pandemic but also in the years to come, as mentioned in an MBN article.