The world’s 10th largest economy, Mexico, has had double digit growth in its e-commerce industry, but continued growth is challenged by the country’s large unbanked population.
E-commerce in Mexico has been booming in recent years. The country saw the number of online shoppers grow 114 percent in 2014. eMarketer, an e-commerce research firm, predicts the number of shoppers to grow from 8.4 million in 2013, to 18 million by 2018.
The rapid growth has been despite a creeping problem that could cap the industry’s growth. According to a 2014 report by the World Bank, %27.4 of people over 15 have an account at a formal banking institution. Rounding to the nearest million, that equates to 21 Million people with accounts, out of a population of 120 Million, with 78 Million over 15. The lack of access to basic financial services has made buying or selling goods online very difficult for the majority of the country’s population.
The persistent problem of banking up take is largely due to the country’s poor banking infrastructure, not a lack of money. According to the World Bank, Mexico’s middle class has been growing, as the country’s poor have lifted themselves out of poverty. The country’s economy recently experienced growth on par with the United States.
Despite having money, without banking services Mexicans can not shop online. This presents a a huge problem for growth in Mexico’s e-commerce industry. The main driver of growth so far has been Mexico’s wealthier (and banked) population.
“Mobile banking and payment technologies could serve as a key stepping-stone into the use of formal financial services, but a major challenge is to design secure mobile applications in a way that makes them easy to access and use in everyday transactions.”
— – World Bank
Two venture backed startups think bitcoin could be the answer to Mexico’s ecommerce problem. Hong Kong-based white label merchant processor, CoinSimple, and Mexico based bitcoin exchange, MexBT, have teamed up to bring bitcoin merchant payments to Mexico.
With no credit history required, no risk of chargeback fraud, and the ability to send and receive funds without a bank account, Bitcoin is an ideal solution according to the two startups. Bitcoin could allow Mexicans with just a mobile phone and a small amount of the digital currency to participate in the nation’s thriving online economy.
“We are looking forward to working with CoinSimple to expand our merchant offerings in Latin America, and to continue driving bitcoin adoption in the region,” said MexBT CEO Gabriel Miron.
The integration of the two companies will give Mexicans the ability to accept bitcoin on their website with a few clicks. CoinSimple’s merchant solution can be added to any website and comes in the form a WordPress, WooCommerce or Magento plugin. After the bitcoins have rolled in, they will be able to exchange the bitcoins for Mexican pesos with MeXBT.
“Less than 8% of the population in Mexico are online buyers – largely because existing payment methods are simply not accessible to the majority of the population. A lack of trust with credit card payments (on both sides of a transaction) is also a major issue,”
— – Bitso CEO, Pablo Gonzalez.
The partnership comes a week after competing Mexican bitcoin exchange, Bitso, announced a new merchant processing service for the country. Bitso’s merchant solution is similar to those provided to American bitcoin merchant companies. They offer auto conversion from bitcoin to the Mexican peso, and bitcoin processing for brick and mortar Point of Sale (POS) systems, in addition to online commerce. Bitso will not charge merchants any fees for the service.
The promise of bitcoin online commerce for the unbanked has already been realized in the Philippines. Coins.ph, a Filipino bitcoin exchange launched merchant processing for bitcoin payments on March 20th, 2014. On the day of launched, two the country’s largest e-commerce websites, MetroDeal and CashCashPinoy, started accepting bitcoin.
“Less than five per cent of people in SEA have payment cards. The low penetration of payment cards means that most e-commerce transactions are still settled by cash, and require additional infrastructure on behalf of the e-commerce company, in addition to inherently being more cumbersome. Coins.ph addresses both of these pain-points by allowing merchants to seamlessly accept Bitcoins for order fulfillment,” said Coin.ph cofounder Ron Hose.
Entrepreneurs in Latin America, Southeast Asia and other parts of the world are looking towards bitcoin to bring the world’s large population of unbanked people into the online economy.