Market Trends of Mexico POS Terminals Industry
Increased Use of Cards as Payment Methods is Expected to Drive the Market Growth
- The growth of fintech companies and digital-only banks is expected to increase competition and the use of debit cards in the Mexican banking industry. In contrast to the United States, where credit cards are widely used, people in Latin America, particularly those with lower incomes, have traditionally made cash payments. In recent years, there has also been a transition in Mexico, and more people are becoming comfortable with using credit cards to make purchases due to growing digital adoption.
- Digital savvy millennials are contributing to the increased use of buy now pay later services in Mexico. Players like PayPal and Sezzle operate in the buy now pay later market, which is particularly popular for e-commerce purchases. With KueskiPay, customers can make online purchases from partners' merchant sites over up to 12 months. Users can pay off payments at OXXO stores with cash, a debit card, or a Mercado Pago account. This is viewed as a replacement for Mexico's well-liked credit card payment system.
- The region is witnessing the investment and entry of multiple players with their credit card services. For instance, in July 2022, a startup, Stori, raised an extra USD 50 million in equity at a USD 1.2 billion valuation. Storiprovides credit cards to underprivileged areas in Mexico. Additionally, it has USD 100 million in debt finance. In addition to participation from other current and new investors, such as Lightspeed Venture Partners, General Catalyst, Vision Plus Capital, Goodwater Capital, and TresaliaCapital, the equity portion of the deal was co-led by BAI Capital, GIC, and GGV Capital.
- There is a wave of cryptocurrency cards in the Latin American market, although they were previously debit cards, as those introduced by Ripio and Bitsowith Visa and Mastercard, respectively. Crecy in Mexico previously offered credit using users' cryptocurrency as collateral. Another option is the prepaid crypto card of the Argentine firm Belo. Its second product, a credit card, was available in September 2022. The card has no additional costs or charges.
Understand The Key Trends Shaping This Market
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Retail Segment is Expected to Hold Significant Market Share
- The retail industry is one of the major users of POS terminals. The segment is expected to hold a significant share in the Mexico region. The retail segment is slowly picking up with the reopening of brick-and-mortar stores in different parts of Mexico. Tech and non-tech-savvy customers are equally demanding in desiring a seamless experience at their preferred retailers.
- The increasing need for multiple POS systems among big retailers, supermarkets, and departmental stores with a robust and centralized system has propelled the retail sector's steady growth in the POS terminal market. The increased emphasis on consumer behavior has led to increased POS adoption due to its consumer mapping application.
- The rising number of retail stores across Mexico attracts customers due to significant discounts and other services; however, customer retention becomes the primary challenge to sustaining in the market. This competition increases the requirement to reinvent their business models to avoid competition concerning price and find the balance between investing in revenue and the latest technologies.
- Moreover, the inventory, sales reporting, financial management, and customer analytics features that POS terminals provide assist retailers in overcoming the problems related to customer retention. Hence, the industry's requirement for customer retention and competition growth promotes the development of POS terminals. mPOSsystems are poised to be significantly utilized in retail outlets to integrate core functions such as sales reporting, customer management, inventory management, and employee management under one system.
- According to the Mexican Association of Nationwide Retailers (ANTAD), there are 33 supermarket chains in Mexico, with a total of 53,793 specialty stores, 2,365 department stores, and 3,227 grocery stores. Even still, informal businesses like open public markets and mobile street vendors that often sell local, domestic goods account for nearly 50% of the retail market. A huge number of retail stores is expected to create an opportunity for the local POS Terminal players to develop new products or incorporate new features in the existing products to capture a wide market share.
