Cash vs. Digital Payments: Where Are Nonbank Acquirers Gaining?

In Mexico, talking about payments is talking about contrasts. Although cash remains the dominant method, used by 85% of Mexicans for purchases under MX$500 (US$27), according to the ENIF 2024, the adoption of digital solutions is growing at a rate that can no longer be ignored. The change is not linear, but it is constant.

The same survey reveals that 69.1% of adults with a cellphone use mobile apps for financial transactions, compared to 54.3% who used them in 2021. In other words, millions of people are making the leap directly from cash to cellphones, but without going through traditional banking channels.

In this middle ground, nonbank acquirers have found their niche. Acquirers are responsible for the entire flow of each transaction in the payment network: analysis, monitoring, authorization, forwarding to the card-issuing bank or fintech for approval, clearing, and settlement to the merchant.

Traditionally, acquirers in Mexico have been banks. However, with the growth of digital commerce, the need for new acquirers with the tools to enable merchants to optimize and scale their businesses, going beyond geographic borders, has increased. Thus, nonbank acquirers are now a key part of companies' payment strategies, while allowing them to meet the expectations of their increasingly demanding customers who expect a better online shopping experience.

Nonbank acquirers drastically minimize the risk of technical failures and streamline payment transactions. This provides merchants with greater speed and security when implementing their payment strategy in the region. This is because these types of acquirers employ advanced technology for digital commerce, ensuring the efficient and seamless reception and processing of each transaction, complying with international security standards such as PCI-DSS.

In the evolving landscape of payment processing, Mexico has witnessed a significant shift, with non-bank entities rapidly gaining ground against traditional banking institutions. This expansion is evident in the growth of point-of-sale (POS) terminals operated by nonbanks, which surged by 9.7% between 2023 and 2024. During the same period, POS terminals managed by banks experienced a decline of 2.9%, as reported by Fintech México. This trend underscores a fundamental change in how businesses, particularly small and emerging ones, are choosing to handle their transactions.

The primary catalyst for this growth lies in the distinct advantages that nonbank acquirers offer to small businesses and the digital commerce sector. For a local neighborhood store, an e-commerce venture, or a digital entrepreneur, the traditional banking system often presents a series of hurdles: complex application processes, stringent requirements, and less competitive rates. 

In contrast, nonbank acquirers provide flexible systems with fewer barriers to entry and more attractive pricing structures. This accessibility and cost-effectiveness are where technological innovation truly makes a difference, enabling a broader range of businesses to accept digital payments.

A prime example of this transition is the widespread adoption of contactless payments. The Mexican Banking Association has reported an impressive 150% growth in contactless transactions over the past year. While banks initially spearheaded the promotion of this technology, it is the nonbank acquirers who have democratized its access. 

They have achieved this by seamlessly integrating contactless functionality into innovative solutions such as mobile readers and SoftPOS (software point-of-sale) applications, making it easier and more affordable for even the smallest merchants to offer this convenient payment option to their customers.

Beyond mere technology, the success of nonbank acquirers is deeply rooted in establishing trust with Mexican consumers. Today's consumers prioritize speed, security, and transparency in their financial interactions. To solidify their position in the market, nonbank acquirers must go beyond simply processing payments efficiently. They are compelled to demonstrate that they offer a robust and reliable ecosystem, one that includes strong guarantees against fraud and the capacity to resolve incidents with the same agility and responsiveness with which they process transactions. 

This commitment to security and customer service is paramount for non-bank acquirers to not only attract but also retain a loyal customer base and continue their trajectory of growth in the competitive Mexican market.

This transformation is also an opportunity for inclusion, since if millions of people join the digital ecosystem through a local store or a mobile app, we are facing a bridge to formalization and access to more financial services. Every digital transaction is a piece of data that can open the door to credit, insurance, or previously unthinkable benefits.

The debate is no longer whether cash will disappear, but how to build a system that works for everyone. The task for nonbank acquirers and fintech companies is clear: accelerate the digitalization of payments without leaving anyone behind, ensuring that every digital transaction is simple, secure, and accessible. Only in this way can an ecosystem that reflects Mexico's true potential be consolidated.