Remittances Grow Along With Card UseBy MBN Staff | Thu, 01/07/2021 - 16:02
Though we entered a new year, the effects of last year’s volatility remains. Among those effects are the predicted leaps in growth for the fintech sector in Mexico as more consumers look for digital alternatives to traditional finance options. Meanwhile, remittances keep flooding into Mexico – on one hand positive news and on another a worry that the help is so needed – and card use, both debit and credit, climbs for the first time since the pandemic began.
All this and more in the Week in Finance.
Remittances have carried on their record-breaking growth despite the hardship of the pandemic and multi-million job losses in the US, the major country of origin for remittance inflows.
Banxico data showed that in November last year, remittances grew by 15.6 percent against November 2019. A total of US$3.381 billion was delivered in November to Mexican families from migrants abroad. The vast majority of the money arrived via electronic transfers.
Even before December’s remittances amounts are published, the US$36.945 billion that arrived between January and November last year makes 2020 the year with the highest remittances amounts since records began in 1995. This upended projections made by financial and economic experts at the beginning of the pandemic, who stated a belief that remittances would fall in line with job losses in the US.
The battering that many industries took during the pandemic last year, and which is still being felt, has not dealt the digital financial services sector as hard a blow and restrictions on movement caused more people to search out alternative financial services.
“Health and mobility restrictions and the fear of contagion have caused an acceleration from consumers to adopt digital financial services. A large part of fintech solutions revolves around digital technologies,” Andrés Fontao, Co-Founder of Finnovista, told El Economista.
Growth in fintech users is expected next year as authorizations continue from the CNBV and the sector evolves within stricter regulations. Financial inclusion is one of the driving efforts of the federal government and the fintech sector could be at the heart of progress.
Debit and credit card use showed signs of recovery in the final months of 2020, with both Nov. 14 and Dec. 19 recording 14.6 million transactions – the highest figures since the early days of the pandemic. Debit card use is recovering fastest as people stick to direct payment forms rather than running up credit.
However, whether this recovery will continue beyond the Christmas period is uncertain. January is a traditionally slim month as consumers save money following an expensive December. With the pandemic pushing several states back into lockdown and economic recovery still uncertain, many consumers will remain cautious, reining in spending ahead of an unsettled future.