In Payments

Mexico is a market with impressive potential for development, although it has one peculiarity: it lags behind other countries in the adoption of financial solutions and regulations, as we can see in the case of CoDi. However, there are clear examples of disruptive solutions that are entering the marketplace and making a difference. This is the case with payments through interoperable QRs codes, where players like Dapp stand out. We discussed the topic in one of our most recent AMI Payments Coffee Chats—weekly meetings where payments experts in Latin America look at the latest developments and trends in the sector.

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CoDi’s lack of pace in Mexico

To provide a little context and have a better understanding of the current mobile payments scenario in Mexico, we have to mention CoDi, the country’s flagship QR mobile payments platform. The Bank of Mexico launched CoDi in September 2019, and it currently has 14 million users (out of a total population of 126 million, according to INEGI, the government’s statistics bureau). By comparison, Pix—in Brazil—was launched in November 2020, also as a QR-based mobile payments system, and it currently has 127 million users (of a total population of 211 million, according to the World Bank).

There are lessons we can learn from this difference with respect to Pix. Below are some of the success factors of Pix, according to AMI’s team of payment experts:

  • Pix was a design collaboration between the central bank and the market
  • With Pix, it is possible to charge a fee on P2B transactions
  • Pix has a defined branding and a unique and transversal user experience in all banking apps
  • The central bank allowed both banks and non-banking players to use Pix
Graphic: Comparing Mexico's CoDi to Brazil's Pix systems. CoDi has 14 million of users | Pix has 127 milliion of users. In May 2022, the transaction volume of CoDi was US$10 million, while Pix was US$158 billion. CoDi was launched in September 2019, and Pix was launched in November 2020.

According to Lindsay Lehr, head of Americas Market Intelligence (AMI) payments division, “mobile payments in Mexico have yet to take off in significant scale.” However, “this scenario is changing and growing. At the same time, at AMI we are watching international players come in and shake up the market (such as Revolut, Nu, or Wise), along with a consortium of local players.”

The growth of mobile payments in Mexico with QR and NFC technology

At a recent AMI Payments Coffee Chat we were joined by special guest, Erick Padilla, Chief Growth Officer at Dapp, a network of interoperable QR payments in Mexico. Padilla says that, “although in Mexico the numbers are not as remarkable as they are in Brazil or Argentina in terms of mobile payments, the key detail in this country is the consistent year-on-year growth in transaction volume. For example, Mexico reached 11 billion dollars in mobile digital transactions in 2021. This volume could double by around 2025, a year in which the projected volume is upwards of 25 billion.” Additionally, he says, in 2022, the projected volume of transactions in mobile payments in Mexico is US$15 billion. These data refer to POS payments with QR codes and NFC transactions with cards, using payment methods that include CoDi and others.

Graphic: Mobile POS payments - Transactions value (US$ million) in Mexico. By 2025, mobile POS payments will reach more than US$25 billion in Mexico. Source: Mastercard

These projections for Mexico are accompanied by a firm megatrend in instant mobile payments in Latin America. According to data from Mastercard quoted by Padilla, 66% of people in Latin America expect to use a mobile payment over the next year. There is also a 14.1% increase projected in the volume of QR transactions in Latin America in 2022.

Consolidation of a single rail for processing QR payments in Mexico and Latin America

As Dapp’s chief growth officer, Padilla points to certain problems that have been identified in the QR payment ecosystem in both Mexico and Latin America. “Alternative payment methods, including digital wallets, are being adopted extremely fast; however, a single payment rail has NOT been consolidated, unlike the credit and debit card purchasing system,” he says.

According to Padilla, the QR payments ecosystem is complex and difficult to operate, and new players appear every day with isolated, limited solutions. “Each of these solutions, CoDi included, are approaching merchants and users with closed-loop systems,” he says. This makes incorporating multiple systems and individually processing of each one—with different reconciliations, account statements, interfaces, and fees—unsustainable, particularly for businesses.

Mexico: classic method of QR processing via independent rails. The image shows different apps (such as Rappi, Banco Azteca and CoDi) that has they own QR processing rail. Courtesy: Dapp

Dapp: an interoperable payment rail in Mexico

An opportunity exists regarding standardization and interoperability for wallets and retailers to help simplify the system and promote the QR growth. Erick Padilla stresses Dapp’s role as a payment network that directly addresses this need. “We have built this interoperable payments network that consolidates all the alternative payment methods in Mexico through a single integrated system. From a technical viewpoint, but also from a practical one, we have achieved it through a standardized back office. […] Dapp has ended up becoming an entire ecosystem.”

In Mexico, Dapp facilitates wallet interoperability via a unique payment Integration. The image shows an example of Dapp processing QR payments coming from apps such as Banco Azteca, CoDi, and Rappi.

Dapp provides this technology to gateways, acquirers, and PSPs, distinguishing itself as a new payment rail.

Challenges to QR payment implementation at the user level

We know that brands compete to guarantee the best buying experience and build brand loyalty. The strategies they implement include the adoption of new technologies for accepting payments. However, the Dapp team has found users to be the main obstacle to growth in alternative payment technologies.

With regard to QR codes specifically, users do not have the tools to recognize how one QR payment system may be integrated with another, primarily because of branding. Padilla explains that, say someone goes into an establishment that offers QR payment under the Rappi branding, but their wallet is with Banco Azteca, it is not easy for them to recognize that the Rappi QR may operate for them through arrangements between both of these players.

This barrier ultimately hampers the buying experience:

  • There is a lack of strategies to educate the user
  • There is a lack of network signage (a standard icon or brand)
  • There is a lack of incentives for adoption
  • There is a lack of awareness on the part of the user

According to Padilla, this means fewer transactions, less adoption of payment methods, and fewer sales.


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Pagos Interoperables Móviles’: unified branding to accept any kind of mobile payment

Dapp took the initiative to connect all the actors in Mexico’s payments ecosystem through a unified icon: Pagos Interoperables Móviles (Mobile Interoperable Payments). Unlike countries such as Argentina—where interoperable QR codes have been standardized thanks to a regulatory initiative—Mexico has seen insufficient efforts to do so. “As a platform of the central bank and a standard similar to Pix, CoDi still has a long way to go. So far, it has failed to involve all the players in the payments ecosystem, like BNPL models, crypto wallets, and others,” says Padilla. Nevertheless, he points out that “regulators are a critical factor to the success of our initiative.”

Imagen con logo y nombre de Pagos Interoperables Móviles

Pagos Interoperables Móviles promises to be an inclusive mobile payments system even beyond QR codes. To explain it, Padilla uses this analogy: “Pagos Interoperables Móviles is not a ‘brand’ the way Mastercard or Visa are; it’s an ‘icon’ or ‘signage,’ like WiFi, Bluetooth, or NFC. So, if a user recognizes this icon at a point of sale, they will know right away that they can pay using their mobile device.” He explains that “we are putting together other mobile payment systems: push notifications, for example, short-distance payments through NFC, or even the use of QR in reverse (where the user shows a QR code to the merchant to make the payment), as already happens at Starbucks.”

In short, Pagos Interoperables Móviles is a network that is adaptable to any mobile payment system:

  • It helps the user to become familiar with new alternative payment models, and builds trust
  • It is the sign for an interoperable network of mobile payments
  • It makes it easy to identify participating networks

Pagos Interoperables Móviles has a transparent fee system based on the payment method

Pagos Interoperables Móviles has three types of fees (depending on the payment method the person decides to use). This is because it integrates payment acceptance through the three rails currently operating in Mexico:

  • The CoDi* fee for payments with CoDi
  • The acquirer fee, for payments with credit and debit cards through wallets
  • The Mobile Interoperable Payments fee, standardized according to two types of products: those using a balance as the payment method (similar to debit), and those using a system similar to credit, such as BNPL and loans.

*Charges for transactions with CoDi are prohibited. Mobile Interoperable Payments charges a small administrative fee for handling reports and reconciliations.

These fees are negotiated between Pagos Interoperables Móviles and the payment gateways, PSPs, and acquirers. Moreover, merchants that offer users interoperable payment through Pagos Interoperables Móviles or QR codes can choose which payment methods they allow.

How exactly does Pagos Interoperables Móviles work?

Padilla explains how it works from three angles.

  • The merchant, which has the facility to accept mobile payments.
  • The user, who will have access to reimbursement options and financial security. In fact, the mission objectives of Pagos Interoperables Móviles include reducing the chargeback.
  • Lastly, the network players, for example, payment gateways and acquirers, who may end up seeing an increase in their transaction volumes.

Pagos Interoperables Móviles could even insert itself into the Mexican e-commerce ecosystem. It also eliminates competition between players by accepting any kind of payment method without showing specific logos or brands.

Lastly, points of sale can adapt the Pagos Interoperables Móviles icon to their own brand standards or banking arrangements.

Example of adaptation od 'Pagos Interoprables Móviles' (Mobile Interoperable Payments) to a specific brand's look & Feel (Brand: Banco Azteca).

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Interoperable QR codes in Mexico

We also invite you to register for AMI Payments Coffee Chats to get the latest first-hand news on the payments sector in Latin America.

Moving beyond chats

Contact us if you would like detailed research on mobile payment systems and interoperable QRs in Mexico or other Latin American markets. Americas Market Intelligence can design and conduct a personalized study focusing on solutions that enable your company to minimize risks and increase its chances of success in the region.

In addition to mobile payments, our market intelligence team can help you with research on a range of relevant payments-sector topics in Latin America or Mexico, such as cryptocurrencies, Buy Now Pay Later, e-commerce in Mexico, mobile wallets, open banking, and much more.

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