12. Limits to Cashless Payments and the Persistence of Cash. Hypotheses About Mexico

In recent years, Mexico has undergone strong growth in the use of cashless payment instruments, primarily the use of credit and debit cards, electronic funds transfers (EFTs) and mobile banking. Although these payment instruments have been available in the country for some time (the bank credit card was introduced in the sixties), their rate of adoption was not remarkably fast, until the last 15 years. The recent acceleration is due to the drive of the financial industry to adopt innovations in payments and penetrate into new market segments, mainly low income earners with little access to financial services, as well as growing interest from the government to encourage cashless payment methods. But despite the large increase in the use of these instruments over the last decade, the use of cash still persists in the Mexican economy. This chapter seeks to document this phenomenon and discuss some hypotheses on why things have happened this way.