While in 2015, 85% of point of sale (PoS) terminals in Mexican stores were provided by traditional banks and only 15% by fintech companies; At the end of 2021, traditional banking contributes 55% of the terminals while aggregators or acquirers, such as Clip, iZettle, Sr. Pago or Mercado Pago, have seen their market share increase to 45 percent.
Ramiro Nandez, director of Solutions for Vendors at Mercado Pago, the financial vertical of the electronic commerce giant Mercado Libre, believes that, however, the main enemy of this type of payment technology continues to be cash, which before the COVID-19 pandemic Covid-18 was used in 93% of transactions in Mexico and now, two years later, it is used in 86% of payments.
Despite the growth of the terminals provided by these aggregators, the number of these devices in relation to the Mexican population continues to be among the lowest of the largest Latin American economies. The eight terminals per 1,000 inhabitants in Mexico are far from the 12 in Argentina and the 22 in Brazil.
“We really have a much more limited number of terminals in Mexico and that means that many businesses are not charging with these devices,” says Nandez in an interview.
Strategy
Some of the main reasons why the terminals of companies such as Clip and Mercado Pago are gaining ground against those of traditional banking include that the contracting or onboarding process is easier, since the requirements and information that these companies require they are much smaller; plus the price is also lower.
The banks themselves are contributing to this segmentation of the market, according to Ernesto Terríquez, director of Minsait Payments in the Americas, since they remain providers of large businesses, while providing backend services, since aggregators resort to to its banking license and regulatory compliance to offer its services.
“They are the ones that have fostered the growth of aggregators, because they provide the banking license and the regulatory part so that fintech companies can be accepted,” says Terríquez in an interview.
Added to this is the sales strategy developed by each of the fintech companies that offer this type of device. In the case of Mercado Pago, this strategy involves first attacking small and medium-sized businesses, from pharmacies to street stalls, and by including them in the Mercado Pago ecosystem, which allows these merchants to offer balance top-ups, Services pay; In addition, it opens the possibility of access to work credit.
Mexico, one of the most difficult
The low level of banking and financial education among the Mexican population have meant that cash remains king of the means of payment and that, according to Ramiro Nandez, Mexico is a particularly difficult market for electronic or digital means of payment, such as those made through QR codes or contactless payments (NFC).
“The revolution of QR payments that did happen in China and that even Mercado Pago promoted in Argentina, where 20% of the economically active population pays with the Mercado Pago QR code, has not been seen,” he says.
Among the challenges that the country faces regarding the adoption of this type of payment by the population are security, trust in institutions, and financial and digital education, according to Nandez.
rodrigo.riquelme@eleconomista.