Even though financial inclusion has increased 37 per cent since 2012, cash continues to be the most important payment method in Mexico. The number of people who do not have their own bank account in Mexico is significant. According to the statistics of the most recent financial inclusion survey published by the CNBV, only 47 per cent of the population have an account with a financial institution. The CNBV and the Mexican Central Bank are very much concerned with this and over the last decade have made considerable efforts to increase banking penetration in Mexico. Some of these measures have included launching simplified bank accounts with transactional and balance limits but that may be opened remotely, such as first and second level accounts that are addressed in Section IV. Others regard facilitating mobile payments. At the same time, cash payments are being limited and controlled under anti-money laundering and counterterrorism provisions. It is expected that the LITF will increase bank penetration by introducing consumers to simple technology to save and raise money, which may eventually lead the unbanked population to trust banking institutions and open bank accounts.
Credit and debit cards are also recognised payment methods but their penetration level is still very far from that of cash. Credit cards may be issued by almost any lending financial institution (banks and multiple purpose financial entities) while debit cards may only be issued by banks and in a limited manner by other financial institutions authorised to take retail deposits. Stored-value cards, similar to debit cards, may now be issued by FTIs, specifically by e-money institutions.
To date, non-financial institutions may only issue closed-loop prepaid cards that are not cash-redeemable. Open-loop cards (i.e., those that may be used with different merchants) and cash-redeemable cards may be deemed to be retail-deposit-taking activities, which are limited to banks and a limited number of financial institutions, including FTIs.
Electronic transfers are also common payment methods. Banks are required to offer this service to their clients. Certain fees may be charged for interbank transfers. The Electronic Interbank Payment System (SPEI) is the most-used system for these means. SPEI is a system developed and managed by the Mexican Central Bank that allows the public to generate online transfers almost instantly. The Mexican Central Bank clears and settles these transactions and it works very efficiently. To use the SPEI platform, users must have a standardised bank key (known as a CLABE) and the account number of the receiver's debit card or their mobile phone number (if the account has been previously linked). FTIs may also provide electronic-transfer services outside the SPEI system.
Cheques are also used as payment methods although the new banking generation is relying more on electronic payments and card payments. In Mexico, the number of transactions involving cheques suffered a 7 per cent decrease between 2010 and 2017 according to the statistics of the most recent financial inclusion report published by the CNBV.
Mobile banking is a payment method regulated under the General Provisions Applicable to Credit Institutions (the General Provisions) issued by the CNBV, which defines it as an electronic banking service accessed through a mobile phone number linked with the account. This payment method is subject to the limitations set forth on account levels referred to in Section IV. Mobile banking is highly regulated in terms of authentication, identification and security procedures, among others.
The General Provisions contain several provisions that ensure credit institutions establish sufficient safety measures and security controls for the information used through electronic devices, such as the express consent of the user for hiring this service, a provision in the agreement specifying the maximum amounts allowed per operation, mechanisms to identify the user and grant access, and procedures to cancel the service, among others.
Under the same regulations, mobile payments are defined as those performed through a mobile limited to an equivalent of 1,500 unidades de inversión (UDIs) per day (approximately 9,285 Mexican pesos). The regulation of mobile payments is lighter than the regulation of mobile banking to foster financial inclusion by simplifying low-value payments.ii Recent developments
As a result of the current regulations and according to the CNBV's figures, the use of mobile banking and mobile payments is on the rise. During June 2017, the accounts linked with a mobile number were 13 million, which represents a 43 per cent increase on the previous year's figures. The aggregate growth rate for the period between 2013 and 2017 was 71 per cent.
Another recent development was the establishment of security measures applicable to both credit and debit cards to avoid their cloning by replacing the use of the magnetic stripe on cards with a chip. This led to the issuance of new cards and several modifications made by the institutions in order to adapt all their automated teller machines (ATMs) and points of sale (POS) nationwide. As a consequence of the above, any institution that agrees to perform operations with cards without a chip at their ATMs or POS assumes liability for all risks and must bear any costs arising from cloning such unrecognised charges reported by the cardholder.
Another key development was the issuance of the General Rules for Payment Networks. Before the issuance of these rules, card payment networks were mainly unregulated. These rules regulate the following:
- The terms and conditions of the payment networks, which among other things:
- permit the inclusion of new participants in networks on a non-discriminatory and competitive basis in respect to pricing, operational, technical and contractual conditions;
- permit the resolution of conflicts of interest between the participants in networks;
- allow transparency of the content available to potential participants in networks; and
- guarantee the integrity of the payment networks, the continuity of the operation and security of the information without creating barriers to entry.
- an itemised description of the services, conditions and standards of the services provision;
- terms and conditions (including economic terms and consideration) of the services provided in the agreement;
- equal and non-discriminatory treatment; and
- production of account statements.
Also related to payment networks, a few years ago several complaints from the participants of the credit and debit card payment market over the lack of transparency and competition regulation in clearing houses were filed. A clearing house (switch) is an entity authorised by the Mexican Central Bank to act as the central entity or operator of a centralised processing mechanism through which authorisation requests, payments authorisations, payment rejections, returns, adjustments or other financial obligations related to card payments are exchanged between acquirers and issuers, including clearing.
In response, the Mexican Central Bank, seeking to ensure competition within the sector, issued the Rules Applicable to Clearing Houses for Card Payments with the objective of combating barriers to entry, avoiding price distortions and improving security systems. Among the prohibitions set forth in the regulations, all exclusivities, discriminatory practices and charging of fees not authorised by the Mexican Central Bank were forbidden.
But without a doubt the most recent development that will change consumer finance dramatically is the LITF, and all secondary regulations that have followed and will follow from the SHCP, the CNBV, CONDUSEF, the Mexican Central Bank and other regulators. Some of these regulations have already been issued, for instance, the General Provisions Applicable to Financial Technology Institutions (the FTI General Provisions) issued by CNBV on September 2018, establishing a legal framework for FTIs' organisation, which includes provision for documents and information that need to be submitted to request authorisation to act as an FTI, minimal capital requirements, limits to receive cash and transfer resources, and applicable accounting criteria, among others.