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If you missed the last one about OXXO Pay and its impact on the e-commerce market in Mexico, check it out here.
Summary
If you have a few minutes to spare, here's what you need to know about SPEI and its importance for e-commerce in the Mexican market.
- SPEI, Mexico's real-time electronic payments system that facilitates secure and instantaneous money transfers between bank accounts, is used by six out of every ten people in Mexico, facilitating more than 13.7 billion digital transactions since its launch in 2004. Initially registering only 215,634 transactions totaling US$1 billion, SPEI experienced dramatic growth, with 2023 alone witnessing more than 3.894 billion transactions valued at nearly US$31 billion. The system is predominantly used by people between the ages of 25 and 54, with the 35-54 age group accounting for 38% of usage, followed by the 25-34 age group with 28%. Usage rates for those under 25 and over 64 range between 9% and 17%, respectively.
- As a key component of Mexico's financial system, SPEI significantly enhances the e-commerce sector with its real-time processing capabilities, handling about 3% of e-commerce payment volume, approximately $2.22 billion. This integration not only provides speed and reliability in online transactions, but also offers a secure alternative to traditional payment methods by enabling direct bank transfers, thus mitigating risks such as fraud and chargebacks. As e-commerce grows, SPEI's role is expected to expand, backed by its 24/7 availability and the convenience it offers, which aligns well with the ongoing nature of online shopping and could lead to wider adoption among businesses and consumers.
- Businesses have adopted SPEI for its ability to enable real-time transactions crucial to effective cash flow management and time-sensitive payments. With its flexible transaction limits, SPEI supports diverse payment needs, operates 24/7 to enhance business operational flexibility, and is universally accessible through most major banks in Mexico. In addition, the finality of SPEI transactions eliminates the risk of chargebacks by providing a secure environment through multi-layered security measures, including advanced encryption and continuous monitoring. This security, combined with SPEI's cost efficiency and broad acceptance, significantly strengthens its adoption in a variety of sectors.
- The future of SPEI is shaped by ongoing developments, notably with the introduction of Cobro Digital (CoDi) in 2019 and Dinero Móvil (DiMo) in 2023. Despite CoDi's innovative features, such as QR codes and NFC for payments, it has had limited adoption, attracting only around 8% of the Mexican population. To address these challenges and improve user engagement, Mexico's central bank, BANXICO, launched DiMo, which simplifies transactions by enabling instant transfers using just a phone number. In its first year, DiMo is expected to significantly outperform CoDi, with projections of enrolling 5 million users and processing over US$560 million in transactions, far surpassing initial expectations for CoDi.
What is SPEI?
Sistema de Pagos Electrónicos Interbancarios (SPEI) is a real-time electronic payment system developed by the Central Bank of Mexico, BANXICO, in 2004. It allows instant and secure funds transfers between bank accounts throughout Mexico. Accessible 24 hours a day, 7 days a week, SPEI is used for a wide range of transactions, from routine bill payments to one-time purchases. Its fast processing and robust security features make it a preferred financial tool for both individuals and businesses. As a cornerstone of Mexico's financial infrastructure, SPEI improves the efficiency and security of monetary movements. This system represents a significant step toward modernizing and simplifying financial transactions in the country, where cash is still predominant.
How to make a payment with SPEI
SPEI operates similarly to other online banking systems, streamlining the payment process during online purchases. At checkout, customers can select SPEI as their payment option, which generates a receipt containing essential payment details.
To use SPEI, customers need a bank account that supports Internet and/or mobile banking, as payments are debited directly from their account. Essential payment details required include the recipient's 18-digit CLABE (Clave Bancaria Estándarizada) and payment amount.
The entire payment process is handled through the user's bank. Once the transfer is completed, users receive a detailed receipt, ensuring that the transaction is transparent and secure. This setup not only simplifies payments, but also improves security and convenience for Mexican consumers.
How SPEI is transforming e-commerce in Mexico
As a major player in Mexico's financial landscape, SPEI is increasingly influencing the e-commerce sector. With its real-time processing capabilities, SPEI handles approximately 3% of Mexico's e-commerce payment volume, which equates to around $2.22 billion. This adoption underscores its growing role in facilitating online transactions where speed and reliability are crucial. For businesses, SPEI's appeal lies in its ability to provide instant payment confirmations, improving the efficiency of online sales operations and customer satisfaction by reducing the waiting time for payment authorization.
In addition, the integration of SPEI into e-commerce platforms offers a secure alternative to traditional payment methods, which can be prone to delays and security concerns. By enabling direct bank transfers, SPEI mitigates the risks associated with card payments, such as fraud and chargebacks, thus providing a safer environment for both merchants and consumers. This security feature is particularly significant in a digital landscape where trust and security concerns can influence purchasing behavior and brand loyalty.
As e-commerce continues to expand in Mexico, SPEI's role is likely to grow further, driven by its ability to adapt to the needs of a dynamic market. The 24-hour availability of the system allows businesses to operate and accept payments outside of traditional banking hours, which aligns well with the continuous nature of online commerce. This convenience is a crucial factor in enhancing the consumer shopping experience, potentially increasing the adoption of SPEI as a preferred payment method among more e-commerce businesses and shoppers in Mexico.
Why did companies adopt SPEI?
- Real-time transactions: SPEI enables the instantaneous transfer of funds between bank accounts, which is crucial for companies that need to manage cash flow effectively and make time-sensitive payments.
- Flexible transaction limits: SPEI supports the execution of large and small value transactions in real time, giving businesses the flexibility to handle diverse payment needs without the constraints of fixed limits.
24/7 availability: The system operates 24 hours a day, 7 days a week, allowing businesses to make payments outside of normal banking hours, thus enhancing operational flexibility.
- Widespread accessibility: Since SPEI is compatible with almost all major banks in Mexico, it provides a universally accessible platform for businesses to conduct transactions within the country.
- No risk of chargebacks: SPEI transactions are final, meaning that once money is transferred, it cannot be automatically reversed. This feature is especially advantageous for businesses, as it eliminates the risk of chargebacks that are common in credit card transactions.
- Enhanced security: SPEI secures every transaction with multi-layered protections, including advanced encryption and strong authentication protocols. Continuous monitoring also protects against suspicious activity, ensuring the security of funds and user data.
- Cost efficiency: SPEI provides a cost-effective solution for transferring money, offering lower transaction fees that are attractive to both individuals and businesses. This affordability, coupled with its efficiency and security, greatly enhances its popularity and adoption in various sectors.
What's next for SPEI
New initiatives: In 2019, Banxico introduced Cobro Digital (CoDi), a new instant payment system built on SPEI's infrastructure. CoDi offers functionality for payment request transactions using QR codes, near field communication (NFC) and internet messaging. Users can create a QR code that includes payment details and share it through messaging applications or the CoDi application. Despite these features, CoDi has not met its initial adoption goals and remains underutilized in Mexico (only 8% of its population has accounts). In response, Banxico launched Dinero Móvil (DiMo) in 2023, a service that simplifies instant bank transfers through SPEI using just a phone number. For its first year, BBVA Mexico anticipates enrolling 5 million users for DiMo, surpassing the total number of active CoDi users, and expects to process more than US$560 million worth of transactions, significantly more than the volume initially projected for CoDi.
Verdict
SPEI remains a key player in Mexico's payments landscape, acting as the foundation for innovations such as CoDi and DiMo, which build and expand its infrastructure. While SPEI provides the essential framework, CoDi and DiMo enhance its functionality with features tailored for modern digital transactions. This seamless integration ensures SPEI's continued relevance and adaptability in Mexico's evolving financial ecosystem. As digital payment solutions grow, SPEI's established network and role in supporting new technologies keep it vital to Mexico's shift toward more digital financial services.
As I explore the rapid evolution of SPEI and its profound impact on Mexico's payments landscape, I invite you to join the conversation about this well-adopted payment method. How do you see SPEI shaping the future of e-commerce and beyond? Share your thoughts and experiences with me on social media. Let's explore the opportunities and challenges SPEI presents and spread the word about this payment system. Share this newsletter and join the dialogue today!
If you have questions or wish to continue the discussion, feel free to contact me directly at tony@rebill.com.
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