Amazon partners with Banxico for a new cardless payment system

Contxto – Down the road, Mexican consumers may be making purchases via mobile QR codes, both online and in-person. This is allegedly in the works following Amazon reaching out to Mexico’s central bank, Banxico.

Overview

At the moment, Banxico is developing a government-endorsed mobile payment system called CoDi. The purpose is to attract more Mexicans into the “formal” financial sector, according to Reuters.

Customers will be able to make online payments or in-person purchases by using QR codes on their smartphone device for zero additional costs. A pilot is supposed to happen later this month.

Both Amazon and Argentine competitor Mercado Libre have expressed interest in adopting this sort of banking system, according to Jaime Cortina, Banxico’s Director of Operations and Payments. Together, they seem quite eager to get the ball rolling.

“Amazon and Argentine rival MercadoLibre have approached the bank about adopting the system,” said Cortina. “They have also said that they could implement it relatively quickly.”

While Amazon declined to provide any commentary on the suspected trade deal, MercadoLibre admitted that the payment department is communicating with the central bank. No other comments were provided.

What is the future of phone-based banking?

Based on Contxto’s previous coverage of Fondeadora and Nubank, it’s apparent that “neo-banking” is becoming an increasingly popular trend in Mexico where over half the citizens don’t have bank accounts.

Not only is neo-banking gaining momentum in Latin America but also in other emerging markets like China, India and Kenya. User-friendliness and affordability are the winning combination.

On a local level, this should prompt positive results in Mexico were only 3.9 percent of retail sales were made online last year. As expected, Amazon and MercadoLibre were go-to retailers.

Both companies also want to empower non-traditional bankers to shop online. Amazon even launched its own debit card last year for creditless clients.

Conclusion

Nowadays, President Andrés Manuel López Obrador’s administration is launching one new initiative after another. From promoting literacy to providing better pensions to elderly citizens – the leader genuinely wants to improve Mexico’s quality of life.

In that sense, financial technology improvements seem to be an effective method to alleviate poverty in the world’s 15th largest economy. Mark my words, this project will come into fruition sooner than later.

-JA