Digital Payments, E-Commerce Give Consumers, Merchants Options

The adoption of digital media to conduct payment transactions is on the rise globally. Between 2018 and 2019, cashless transactions increased by almost 14 percent, mainly due to the increase in the use of digital media in China and India, resulting in 708.5 billion digital transactions, the highest growth recorded in the last 10 years. This was announced by the consulting firm Capgemini in its 2020 World Payments Report, in which more than 235 specialists from the financial industry participated. 

The report indicates that in 2019, the Asia-Pacific region surpassed Europe and North America with 243.6 billion electronic transactions, making it the leading region with the most cashless transactions. This growth was driven by increased smartphone usage, the rise of e-commerce, the adoption of digital wallets and innovations in mobile payments with QR codes.

This growth is natural, since in the face of the health contingency measures, customers opted for the use of digital means to make payments. The same contingency also forced many SMEs to look for new ways to market their products and adopt digital means of payment.

The study shows that for 68 percent of respondents, internet banking and direct transfers continue to be the most commonly used payment method; 64 percent of users prefer contactless payments and 48 percent of respondents opt for the use of digital wallets, including QR code payments.

The Mexican Case

The Online Sales Study: The Mexican Digital Consumer 2022 report, by the Mexican Association of Online Sales (AMVO), shows that e-commerce in Mexico reached MX$401.3 billion (US$20 billion) in 2021, having experienced growth of 27 percent compared to the previous year. As a result, e-commerce represents 11.3 percent of total retail sales.

For the third year, Mexico is in the Top 5 of countries with the highest growth in retail e-commerce, in line with important markets like India, Brazil, Russia and Argentina. E-commerce in Mexico exceeds the world average by more than 10 points, demonstrating a market with strong expansion. At STP, we have witnessed the growth of our customers. In particular, we have witnessed the need for businesses to digitize the payments of their buyers. We are the Mexican fintech company that automates SPEI operations and digital collection (CoDi) of more than 1,500 companies in Mexico.

Final buyers saw the advantages of e-commerce as companies implemented online stores and methods to receive digital payments. This first stage is very good but now it is up to companies to automate or digitize more internal processes that allow them to automatically identify these payments and avoid chargebacks. In the coming years, we will see significant growth in the adoption of CoDi in the e-commerce industry, as it facilitates the payment experience for users, reduces costs for companies and through technological integration, such as that offered by STP, it can be automated.

Finally, AMVO reported that in October 2020, 63 percent of consumers resumed their routine activities; however, 39 percent said that their online purchases had increased. The report also detailed that, since the beginning of the pandemic, certain categories, such as food delivery and fashion, had shown a growing trend; however, by October 2020, technology items, accessories, sports, furniture and decoration had attracted an  increase in purchasing interest.

For years, e-commerce in Mexico was a little-used alternative by consumers; only big brands and distributors had a functional online store and it was almost unthinkable for a small store to establish one; however, the pandemic and its restrictions changed this situation as this channel grew from US$6.9 billion in 2019 to US$11 billion in 2020. According to Euromonitor, for retail categories, e-commerce had a 5 percent penetration in 2020 and it is expected to reach 9 percent in 2025. The most relevant categories driving growth are apparel and footwear with 31 percent, electronics with 28 percent, and groceries with 15 percent of total online retail sales.

Given this account of what has been the forced growth of e-commerce due to the pandemic, we cannot ignore the importance of the payment methods offered to users of e-commerce stores or apps, so that they can close that purchase. The factor of the options of how the payment will be made is what often leads a person to take this last step. Digital methods, such as transfers through SPEI or CoDi, are carried out instantly, there is no person-to-person contact and for the merchant, they can represent a great option to reduce chargebacks.

To give us an idea of the revenue generated by the Buen Fin offers, only in 2020, AMVO reported that online sales accounted for 15 percent, reaching MX$36.1 billion (US$1.5 billion). The growth in this area was largely driven by confinement, broader ad campaigns and the intensive use of virtual channels. 

With a view to the upcoming discount season in the country, does your company already have a functional e-commerce store? It is very important to offer different payment options, so people can decide how to close their purchase, from a transfer through SPEI to new digital payment methods like CoDi or "Buy Now, Pay Later," options that STP has helped many clients implement and that many consumers  are waiting for as they hunt for end-of-year offers.