Real-Time Digital Payments: The CoDi Case in Mexico

In today's world, technology is transforming every aspect of our lives, including how we conduct financial transactions. Real-time digital payments have become an integral part of the revolution, impacting users and businesses alike by providing greater convenience, security, and efficiency.

CoDi is a real-time digital payment platform developed by the Bank of Mexico (Banxico) that allows users to conduct financial transactions quickly, securely, and at no cost via QR codes on mobile devices. Its goal is to promote financial inclusion and reduce cash usage in the Mexican economy.

From the Sistema de Transferencias y Pagos (STP), we have observed that this platform supports financial inclusion. CoDi has significantly contributed to this aspect in Mexico by enabling people without access to traditional banking services to conduct digital transactions using only their mobile phones.

Since its implementation, CoDi has led to a gradual decrease in cash usage in everyday transactions, not only reducing the risk of theft and fraud but also facilitating the tracking and regulation of financial activities.

At its four-year mark, this payment method has recorded 9,487,666 transactions in the country, with transaction amounts ranging from MX$901 (US$54) on business days to MX$740 (US$44) on weekends and holidays, according to Banxico's figures.

Banxico also states that this system has around 18,441,000 validated accounts, of which at least 1.5 million people have used CoDi.

The effects of this growth are already noticeable in the Mexican economy. The adoption of CoDi has stimulated the growth of the digital economy in Mexico by facilitating e-commerce and transactions between businesses and consumers.

The Sistema de Transferencias y Pagos (STP), as a direct participant in the Interbank Electronic Payment System (SPEI), has noted that in Mexico, as in other countries in the region, there is a shift toward not only using credit cards for payment transactions but also using digital wallets, NFC, SPEI transfers, CoDi, and now Dimo.

Today, many major retailers offer these options as payment methods. While cash remains dominant for transactions under MX$900 , digital payments have become significant for frequent payments, such as service payments.

Moreover, one advantage for entrepreneurs is that by accepting digital payments, they allow businesses to save up to MX$84,000 per year in commissions typically charged by banks' Point of Sale Terminals (POS) and bank aggregators.

The integration of CoDi into POS terminals has allowed merchants to offer their customers an additional payment option, complementing traditional methods like credit and debit cards. This integration has been achieved through software updates to existing POS terminals, making adoption easier for merchants without the need for additional hardware investment.

During these four years of operation, the CoDi platform has been integrated with other digital payment systems, enabling smooth fund transfers between different platforms and financial services.

The implementation of CoDi has also led to financial education programs aimed at informing and training users on the proper use of digital payments and managing their personal finances.

Challenges and Future Opportunities

Although CoDi has had a positive impact on digitizing payments in Mexico, it still faces challenges in terms of widespread adoption and general acceptance. Continuous education, improving technological infrastructure, and promoting consumer trust are key aspects that need to be addressed to ensure the ongoing success of CoDi and other real-time digital payment systems.

These challenges present an opportunity for the entire industry, including authorities and companies, whose advancements in this area have been considerable in recent years; however, now the focus should be on consistency. This can be achieved by including new allies in this equation, such as the academic sector and the media.

Another example is Pix, owned by the Central Bank of Brazil, which is an instant payment or transfer method through scanning a QR code. These payments can be made to a commercial store, financial institutions, and the Brazilian government.

Although they are not exactly the same payment systems, both CoDi and Pix have been efforts by central banks to promote financial inclusion and the adoption of digital payments in Latin America, a region where such transactions are still very limited. The difference in the results of each one ─ besides the promotional campaigns of both applications ─ lies mainly in the versatility of Pix, but also in the composition of each country's financial ecosystem and the institutions participating in the platforms.

Real-time digital payments like CoDi represent a significant evolution in the global financial landscape, offering tangible benefits for both consumers and businesses. With the continuous advancement of technology and collaboration between the public and private sectors, the future of digital payments promises to be even more exciting and transformative.