Unveiling financial inclusion: transaction size and cashless payment use in Mexico
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cash use
cashless payments
transaction size
Mexico
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Abstract
In Mexico, only about 47% of the population has a bank account and almost all transactions are conducted in cash— trends notably lower than in countries with similar levels of GDP per capita. To examine this phenomenon, this study analyzes the use of cashless payments by transaction size in Mexico between 2002 and 2022. The results reveal that in 2022, cashless payments accounted for 4.4% of transactions and 13.4% of transaction value (MXD). Subsequently, cashless payment use is more frequent for higher value transactions than for lower value ones. Analysis of payment use for different segments of the population reveals significant urban-rural and socioeconomic gaps. Analysis of payment usage across distinct transaction types indicates that the location of purchase influences payment preferences more than the spending category. Lastly, debit cards and electronic funds transfers have experienced the most growth in payment usage between 2016 and 2022 in Mexico, particularly for medium and high value transactions. However, informal credit such as tabs remain popular for very low and very high transaction values. Given that cashless payment use is of principal importance in promoting equal access to financial services, results from this study suggest that public policy should tailor financial products and services to rural and low-income households, reduce the informal economy, and address payment infrastructure disparities.