The second most important Latin American market, Mexico is a growing giant that could be a source of huge success for cross-border companies.
It has the highest rate of cross-border sales in the entire region, due to its close proximity to the United States.
Accounting for 18% of all e-commerce sales in Latin America, Mexico represents a great opportunity for merchants that understand the region and its consumers. With that in mind, this article kicks off our exclusive series on how the consumers of each of Latam’s main markets shop and pay online, so you can better navigate your expansion strategies.
Based upon data from BoaCompra by PagSeguro’s Digital Renaissance in Latin America white paper, keep reading and understand the fast-changing market of Mexico:
A cross-border e-commerce giant
With an e-commerce market that was worth almost $ 50 billion in 2021, Mexico is the second biggest market in Latin America, representing 18% of all online sales in the Six Main Markets of the region — which also include Brazil, Colombia, Argentina, Chile, and Peru.
With a 39% annual growth rate, e-commerce in Mexico should triple in the next few years and reach $ 146 billion by 2025. A lot of that volume comes from cross-border sales, which sum up 24% of all online purchases in the country, the highest share in Latin America.
This is mostly due to the fact that Mexico borders the USA, making local customers very used to buying from abroad. And there’s still a lot of room to grow: cross-border sales in the country are expected to rise to 31% by 2025.
Therefore, Mexico is an excellent option for companies to start their Latam sales strategies, providing you understand how Mexicans shop and pay — even though they are indeed very open to cross-border merchants, they are still a different culture, with its own e-commerce and payment habits and preferences. We’ll dive into that below, so keep on reading.
The fast-changing payment landscape in Mexico
Highly impacted by — and well recovering from — the pandemic, Mexico underwent a major digitization process in 2020, which has already proved to be here to stay. With a 61% rate of e-commerce penetration and a total of 60 million e-shoppers, the country also has great numbers of internet penetration: 73%, reaching 95 million citizens.
However, banking access is still not considerably high: 52% of the adult population has a bank account, and only 11% has a credit card. This opens up the way for other payment methods to have a greater representation, unlike most other countries in Latin America, where credit cards are the #1 payment method for online sales.
One of the alternatives to credit cards in Mexico are the debit cards: not usually the choice for e-shoppers in other Latam countries, in Mexico it accounts for 26% of all online sales, and it should rise to 31% by 2025.
For you to have a better idea of how unusual this is, the average rate of debit card usage for online sales in Latam is 11%, expecting to reach 12% by 2025 — an annual growth rate of 28%. In Mexico, debit cards grow at a 39% annual rate.
This is not only due to the low penetration of credit cards, but also to the fact that Mexican consumers are more and more leaving behind cash-based payments, especially for e-commerce. They currently account for 9% of all e-commerce in the country, but will fall to just 3% by 2025.
All of these changes represent the fast shift to a more digital way of buying, where more and more customers seek a more agile way of shopping online. With a 73% rate of internet penetration and 69% of the population owning a smartphone, Mexico follows Latam’s lead and has a higher share of online purchases carried out through a mobile device (72% of all online sales), rather than through a desktop (28%).
In this context, it’s even more important to provide fast, secure, and dynamic shopping experiences to customers, from product selection to payment — which should include not only an easy checkout, but also a wide range of local payment methods, as we’ve shown they are the preferred option for consumers in the country.
In Mexico as in other major Latin American markets, things are moving fast toward a more and more digital world, with new payment methods, new regulations for merchants, and new shopping habits. Thus, understanding the customers in each country and how they prefer to shop and pay online is fundamental to reach success in this region that is full of potential.
To understand more about selling to Mexico and the importance of local payment methods for your Latam strategies, below to talk to us: