Latin America is a fertile ground for the growth of FinTechs because a large pool of potential FinTech customers still remains outside the financial system. Mexico is no exception—over 50% of Mexicans have no access to financial services.
Digital payments, especially retail payments, are the key driver of FinTech evolution in any country. In Mexico, 83% of the retail payments are made in cash. Digitization and imparting financial literacy to the underserved or excluded population are the major challenges. Though Mexico is the second-largest FinTech market in Latin America, FinTech has picked up only recently (past 2–3 years). About 100 new Mexican FinTechs were set up in 2018 alone, representing 52% growth. Payments and Remittances make up only 20% of the market share.
Mexico Jump-Starts Digital Payments with Cobro Digital (CoDi)
Mexico’s unbanked population and smartphone penetration stand at nearly 63% and 40%, respectively. The economy is driven by cash; cash accounts for over three-fourths of all transactions. The country passed the FinTech law in 2018 and has been aggressively promoting digitization. In September 2019, the central ban …