Payment Cards in Mexico

Introduction

Payment Cards in Mexico is an invaluable guide to one of Latin America's largest payment card markets. The report provides statistics on market size, competitor market shares and forecasts. It also provides an overview of regulation, competitor activities, issuer strategy and product innovation including developments in contactless, mobile payments, online and prepaid cards.

Scope

*Data and analysis provided on debit cards, credit cards and charge cards.

*Historic market data and competitor market shares are presented for 2004-2009, with market forecasts presented to 2014.

*In addition the report contains proprietary FSCI survey findings including consumer attitudes to payment cards.

*Concludes with a detailed analysis of developments in the areas of contactless, mobile payments, online and prepaid cards.

Highlights

Mexico is the third most populated country in the Americas but the penetration of cards stands at 0.7 cards per person which is among the lowest in the region. Mexico's banks and retailers have launched aggressive campaigns aimed at increasing the take up and usage of credit cards but have since tightened their criteria due to rising defaults.

A large number of Mexicans work abroad, most notably in the US. As the state of the US economy worsened, the percentage of Mexicans living in the US who regularly send remittances home fell but it does not mean that opportunities have dried up and there are prospects for players with the right strategy.

There are many examples of general purpose prepaid cards in addition to innovative prepaid programs linked to loyalty schemes and being incorporated with the use of mobile phone for remittance payments. Several other m-payment initiatives are underway to provide P2P services but NFC and contactless technology are yet make an impact on Mexico.

Reasons to Purchase

*Learn how the Mexican general purpose payment card market has developed over the last five years.

*Understand recent developments in the market in terms of consolidation, new entrants and product innovations.

*Use Datamonitor's five year forecasts for the market to plan your future strategy.


Report Highlights

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Overview 1
Catalyst 1
Summary 1
Executive Summary 2
Sizing and forecasting the payment card market in Mexico 2
Competitor and product developments in Mexico 3
Online, contactless, prepaid and mobile payments 4
Table of Contents 6
Table of figures 7
Table of tables 8
Sizing and Forecasting the Payment Card Market in Mexico 9
Overview 9
Key macroeconomic and consumer data 10
Macroeconomic trends and performance 10
GDP 10
Real GDP growth 11
Inflation 12
Unemployment 13
Demographic and consumer trends 15
Sizing the payment card market in Mexico 16
Penetration of payment cards 16
Number of payment cards in issue by type 20
Number of payment card transactions 21
Split for pay now and pay later cards 21
Split by ATM and POS transactions for pay-later cards 22
Frequency of use 23
Frequency by POS and ATM 24
Value of payment card transactions 25
Transaction values in total by card type 25
ATM and POS transactions for pay-now and pay-later 26
Average transaction value 27
Average transaction values by POS and ATM 28
Trends in payment card use compared to other countries 29
Pay-now card use 29
Pay-later card use 31
ATM and POS terminal numbers 33
Regulation of Mexican retail banking 35
Commercial banks 35
Developments banks 35
The banking sector and payments regulation 35
Credit bureaus 36
Key issues facing the market 36
EMV 36
Forecasting the payment card market in Mexico 37
Forecasting the pay-now card market 37
Forecasting the revolving credit card market 38
Forecasting the charge card market 40
Competitor and Product Developments in Mexico 41
Overview 41
Key competitors in the market 42
Banamex 42
HSBC Mexico 42
Santander Mexico 42
BBVA Bancomer 43
Banorte 43
Competitive landscape 43
Over the last five years an increasing number of retailers have entered the credit card market 44
Remittances constitute 4% of GDP and provide numerous opportunities for players with the right strategy 44
BBVA Bancomer launches money transfer service 45
Nexxo Financial offers remittance by ATM from the US 45
Wells Fargo launches ExpressSend service in the US 45
Citibank offers remittance service with no transfer fees 45
Chase offers free money transfer service to Mexico 46
Western Union expands its footprint in Mexico 46
Significant new entrants or exits 46
2010: Santander buys 24% stake in Santander Mexico 46
2010: Brazil's Bradesco to buy IBI Mexico private label and consumer finance arm 46
2009: TSYS signs agreement to process Unicard Mexico cards for Unibanco 47
Card issuer market shares and performance 48
Number of credit cards in issue by brand 48
Pay-now card market shares 48
Charge card market shares 50
Product design and issuer strategy in Mexico 50
Retailers are increasingly targeting low-income customers 50
Banco Azteca was the first retailer finance brand and has since established its own credit history bureau 51
Wal-Mart is a recent entrants which has a clear strategy for targeting low-income customers 51
Consumer attitudes to credit cards 52
The fear of not having control of one's finances and the cost of products are the biggest reasons for not taking out a credit card 53
Consumers do not view other forms of credit as a cheaper alternative to payment cards 54
Mexican cardholders are the least likely to pay off their balance in full each month 55
A large proportion of cardholders anticipate cancelling their credit cards 56
Leading revolving credit products and price points 56
Card scheme market shares and developments 58
Pay-now card scheme shares 58
Number of cards in issue 58
Value of transactions 59
Revolving credit card scheme shares 60
Number of cards in issue 60
Value of transactions 61
Charge card scheme shares 62
Number of cards in issue 62
Value of transactions 63
Online, Contactless, Prepaid and Mobile Payments 64
Overview 64
Online payments with Visa cards represented a US$10 billion market in Latin America in 2009 65
Contactless payments represent a $17.5 billion opportunity in Mexico 66
Mexico is the third largest market in terms of potential opportunity in the Americas, being worth $20.8 billion 66
Integration of contactless commenced in 2006 driven by MasterCard initiatives, but take-up has been slow 67
The petrol market offers the biggest opportunity for contactless but has witnessed few developments 68
Convenience stores also offer numerous opportunities, but no large retailers have been targeted thus far 69
Fast food is the third biggest opportunity but has not received as much attention 69
In crowded bars, the benefits of contactless payments are clear 70
Developments in prepaid cards 70
Soriana's My Saving Banamex MasterCard is an interesting example of a prepaid card 70
TransCard launches new fuel card network for Mexico and Latin America 71
Developments in mobile payments 72
The lack of alternatives makes the potential for domestic mobile P2P strongest in Mexico 72
Safaricom's M-Pesa system is a good example of what can be achieved when one mobile network operator dominates the market 73
Cross-border remittance also has potential for mobile P2P as demonstrated by the Smart Padala system 73
MasterCard collobarated with Smart Hub for the launch of Mobile Payments Gateway 73
Rêv has a partnership with Omnilife and offers a prepaid card linked to a mobile phone 74
NFC trials and other implementations of mobile payments are yet to have an impact of Mexico 74
Appendix 75
Supplementary data 75
Definitions 78
AAGR 78
Affinity card 78
CAGR 78
Co-branded card 78
Credit card 78
Deferred-debit and charge card 78
EMV 78
EPC 78
ePurse 79
Merchant service charge 79
Pay-now cards 79
POS terminal 79
Private-label cards 79
Methodology 79
Cards and Payments Database 79
Forecasting methodology 80
Further reading 81
Ask the analyst 82
Datamonitor consulting 82
Disclaimer 82
List of Tables
Table 1: Mexico: macroeconomic indicators 10
Table 2: Mexico: demographics and consumer trends 15
Table 3: Datamonitor's forecast for the pay-now card market in Mexico, 2009-14f 38
Table 4: Datamonitor's forecast for the credit card market, 2010-14f 39
Table 5: Datamonitor's forecast for the charge card market, 20010-14f 40
Table 6: Fees and APRs applicable to revolving credit cards linked to loyalty programs in Mexico, 2010 57
Table 7: GDP by country for 2009 75
Table 8: Unemployment and unemployment rates in the Americas 75
Table 9: Mexico: GDP growth, 2004-09 76
Table 10: Card penetration in Latin America 76
Table 11: Mexico: inflation (% change) 76
Table 12: Average transaction value and frequency of use for pay-now cards in Latin America 76
Table 13: Average transaction value and frequency of use for pay-later cards in Latin America 76
Table 14: Number of POS: Latin America 77
Table 15: Population per POS terminal: Latin America 77
Table 16: Number of ATMs: Latin America 77
Table 17: Population per ATM: Latin America 77
Table 18: Current relevant publications 81
Table 19: Future relevant publications 82
List of Figures
Figure 1: Mexico is the fourth largest economy in the Americas 11
Figure 2: The Mexican economy shrank by 6.8% in 2009 12
Figure 3: Mexico's economy witnessed high inflation in 2008 13
Figure 4: Mexico had the lowest unemployment rate in 2009 14
Figure 5: Mexico had the lowest card penetration among Latin American countries, 2009 16
Figure 6: Penetration of pay-now cards is higher than pay-later cards in Mexico, 2009 17
Figure 7: Penetration of pay-now cards in Mexico grew at a CAGR of 12.0% over 2004-09 18
Figure 8: Mexico had the lowest penetration of pay-later cards in Latin America, 2009 19
Figure 9: Pay-now cards account for the maximum share of payment cards in issue in Mexico, 2004-09 20
Figure 10: Pay-now cards accounted for the largest share of card transactions, 2004-09 21
Figure 11: Payments cards were used more at the ATMs than at POS in Mexico 22
Figure 12: Charge card usage in Mexico has increased over 2004-09 23
Figure 13: The share of ATM transactions has been eaten up by POS transactions in Mexico over 2004-09 24
Figure 14: Pay-now cards account for the maximum share of value of transactions in Mexico, 2004-09 25
Figure 15: The value of POS transactions has increased substantially in Mexico during 2004-09 26
Figure 16: Average transaction values were highest for pay-now cards in 2009 27
Figure 17: Average transaction value at POS was higher than at ATMs in Mexico, 2004-09 28
Figure 18: Latin American countries are broadly in line in terms of frequency of use and transaction value of pay-now cards, 2009 29
Figure 19: ATM transactions accounted for the greatest turnover per pay-now card in Mexico, 2009 30
Figure 20: The average value and frequency of use of pay-later cards at the POS vary among Latin American countries 31
Figure 21: Turnover per pay-later card was highest at the POS in Latin America, 2009 32
Figure 22: The number of ATM terminals grew at a CAGR of 12.2% in Mexico over 2004-09 33
Figure 23: The number of POS terminals grew at a CAGR of 22.8% in Mexico over 2004-09 34
Figure 24: Pay-now cards in issue are expected to increase by 4.5% over 2010-14 37
Figure 25: The credit card market in Mexico is expected to grow at a CAGR of 8.9% over 2010-14 38
Figure 26: The charge card market in Mexico will continue to grow through to 2014 40
Figure 27: Banamex Citibank was the leading credit card issuer in Mexico, 2009 48
Figure 28: Banamex Citibank was the largest pay-now card issuer in Mexico 49
Figure 29: Banamex was the largest charge card issuer in Mexico 50
Figure 30: Wal-Mart's strategy for low-income earners' 'road to credit' 52
Figure 31: The fear of not having control of their finances and the cost of products are the biggest reasons for consumers not taking out a credit card 53
Figure 32: The majority of credit cardholders feel that they are not in control of their finances when they use their credit card 54
Figure 33: Mexicans are the least likely to pay off their balance in full each month 55
Figure 34: A large proportion of Mexicans are anticipating cancelling their credit cards 56
Figure 35: Visa has been the dominating pay-now scheme in Mexico, 2004-09 58
Figure 36: Visa-branded cards accounted for the largest share of pay-now transactions, 2004-09 59
Figure 37: Only Diners Club-branded cards showed growth in 2009 60
Figure 38: Value of transactions on all schemes showed a decline in Mexico in 2009 61
Figure 39: Visa was the leading scheme in the Mexican charge card market 62
Figure 40: Visa was the most dominant scheme in the Mexican charge card market 63
Figure 41: More Mexican cardholders use e-payment methods than Brazilians, and even credit cardholders prefer such methods of payment 66
Figure 42: Contactless payments represent a $17.5 billion opportunity in Mexico 67
Figure 43: The petrol market offers the biggest opportunity for contactless payments 69
Figure 44: Soriana's My Saving offers customers a loyalty program on a prepaid card, 2010 71

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