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Adoption and Interoperability of Mobile Money In Mexico

Mexico has one of the most diverse financial services landscapes in all of Latin America, including about 250 fintech firms. In fact, 35 percent of the fintech companies in Latin America that serve people left behind by traditional banks are in Mexico, according to fintech start-up accelerator Finnovista. They also project that Mexico’s fintech space could dominate nearly a third of the banking sector within a decade.

Mexico’s economy is growing and maturing as the country embraces technical innovation to complement its established exports market. As a result, the country is peaking the interest of the world’s investors and its mobile money market is helping to drive  this change.
This is because Mexico’s mobile money market is evolving and innovating in a range of ways to provide a robust infrastructure for investors. The country’s central bank (Banco de México) established an interbank payments system (Sistema de Pagos Electrónicos Interbancarios or SPEI) for low-value transactions, including mobile money, in 2004. This was the first real move towards the country’s current burgeoning mobile money market. 
For 2017, the number of smartphone users in Mexico is estimated to reach 51.4 million, with the number of smartphone users worldwide forecast to exceed two billion users by that time. individuals of any age who own at least one smartphone and use the smartphone(s) at least once per month. Now, most ( if not all ) mobile payments are conducted through a smartphone connected to the internet. So the scope of adoption of money in the foreseeable future looks very promising and this fact is enough to convince both users and the concerned situations to make mobile money payments a medium through which even a person below the general economic line can use avidly.

Interoperability Factor Of Mobile Money in Mexico
The GSMA Mobile Money programme is a strong advocate for mobile money interoperability, particularly when it is industry-led. In Mexico, there is a compelling case for account-to-account (A2A) interoperability from the perspective of the provider, consumers, and the market at large. There are many paths by which to achieve interoperability; the viability and desirability of each must be carefully assessed and evaluated on  a market-specific basis.
In some cases, existing national payments infrastructure may evolve to facilitate mobile money interoperability. We are beginning to see this in Mexico, where the central bank (Banco de México – Banxico) has established its interbank payments system (SPEI, or Sistema de Pagos Electrónicos Interbancarios) as the de facto clearing and settlement mechanism for low-value transactions, including mobile money. SPEI can process transactions starting from one cent, and can reportedly handle at least five times current payments volumes. As national payments infrastructure is traditionally optimised for high-value transfers, this shift is no small feat. [1]
Core milestones of this evolution include:
  • New pricing to encourage low-value payments. Transaction fees that SPEI participants incur today are equivalent to the marginal cost of moving money, which is zero. This is down from four US cents in 2006. Banxico expects this lower transactional cost for banks will translate in lower associated tariffs for end-users.
  • Longer operating hours with (near) real-time authorisation. SPEI makes funds available to the payee in near-real time. The goal is to operate 24 hours a day, 7 days a week, as opposed to the banking business hours the system had initially been limited to. Additionally, SPEI compensation cycles now occur every five seconds, resulting in near-immediate processing for users. These frequent settlement intervals allow for relatively low pre-funding requirements at the central bank.
  • Broader range of participants. Banxico has joined a special club of central banks that have opened their payment systems to non-traditional banks. In the case of SPEI, this includes cooperatives, niche payments banks, switches, and the Mexican national telegraph company (Telecomm), among others. These entities are allowed direct participation in the scheme. Today, 52 out of 107 participants are non-banks.
  • Linkage of mobile numbers to bank accounts. In late 2013, Banxico issued rules for mobile-payment clearinghouses, which include the linkage of mobile phone numbers to banks accounts. SPEI must be used to settle payments among mobile payments providers, whether directly or through a connected clearing house.

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