Why do Mexicans prefer cash? More than 90% of consumer transactions are thought to occur in cash. Lines form at ATMs when salaries are paid. Nearly the whole population lives in a município with a bank branch or ATM, yet fewer than half of adults have a savings or debit account. More than half of accounts lie dormant, and survey respondents report that they prefer to manage their funds in cash. A decade-old program to channel remittances from the United States into bank accounts remains largely disused. Proactive federal policies in Mexico have streamlined central sector payments, converted cash transfers to electronic disbursement, and reduced the flow of US cash into Mexico. And yet for most consumer payments—and even some business-to-business payments—people still prefer to hand cash to someone they know.
The Institute for Business in the Global Context analyzed cash and payments in Mexico from the perspectives of the consumer, business, financial services, and the government. We studied the costs and risks of doing business in cash, in the context of Mexico’s current policy environment for payments. We examine the initiatives and investors that have the capacity to shape the marketplace, and evaluate progress to date.