Mexico, the fifteenth largest economy in the world, runs on cash.
Despite the rise of electronic banking and alternate forms of payment in the past 15 years, nearly 90 percent of consumer transactions in Mexico are still paid using cash.
The popularity of the age-old payment method is, in fact, so high that Mexicans have a higher propensity for cash than any other country in North America.
As of 2015, cash usage in Mexico as a percent of its gross domestic product (GDP) stood at 26.7 percent. And with the growth in Mexico’s economy, overall use of cash is bound to go up. As of 2015, with a GDP of $1,153 billion, Mexico was the third largest economy in North America. Its GDP is expected to grow by 6.8 percent compound annual growth rate (CAGR), reaching $1.6 trillion between 2015 and 2020.
While with growth in GDP, overall cash usage is bound to go up, the proliferation of alternate forms of payment has led to slowing of cash’s growth rate. In 2006, cash usage represented 35.7 percent of GDP and is expected to represent 22.4 percent in 2020.
This relative slowing of cash use’s growth rate is in line with the rest of the world when it comes to cash usage. Nonetheless, various socioeconomic factors such as low bank penetration and financial literacy have contributed toward a greater share of cash usage in Mexico and kept people from rapidly adopting alternative forms of payment.
This report continues with a more extensive study of cash share in Mexico, some of the alternative payments methods that have gained traction and total cash usage.
In the past 10 years, much of the reduction in cash usage in Mexico has come from a decline in over-the counter (OTC) withdrawals, which decreased from $147.8 billion in 2006 to $132.2 billion in 2015. Meanwhile, use of ATMs for cash withdrawals spiked during the same period of time. In 2006, ATM withdrawals represented 13.4 percent of GDP, which then increased to 15.3 percent in 2015. However, despite a decline of over $15 billion in OTC withdrawals, a growth in the number of ATM withdrawals helped offset a sharp decline in overall use of cash. Figure 3 maps the gradual decline in OTC withdrawals and increase in share of ATM transactions.
The full report can be viewed HERE.
Source: Cash Repository
Take control of your money and improve your life.
Join our Withdraw Cash Wednesday campaign and receive timely reminders and tips to take control of your money by using cash.