US online retailing giant Amazon and its Argentinean rival Mercado Libre have successfully persuaded the Mexican Central Bank to introduce a new mobile payment system for shoppers.
The new payment system, known as CoDi, will allow consumers to pay for goods online and in person through smartphones using QR codes, according to Reuters.
Over the years, both Amazon and Libre have invested a huge sum of money in Mexico. But online retailing in Mexico still accounts for less than 4% of sales, because nearly half of the Mexican population has no bank account.
However, the retailers are convinced that Mexicans want to purchase online and that the fear of online fraud is keeping them away. The new mobile payment system will dispel the fear of online fraud as it uses QR codes.
In its 2017 study, research firm Euromonitor International predicted that the online shopping in Mexico would reach US$14 billion by 2022.
Meanwhile, Amazon sales in Mexico has been growing year after year. In 2017, it generated US$502 million in sales, compared with $243.9 million it generated in the previous year.
The Argentinean firm grew four-fold in Mexico over the past two years, according to its regional officials. It has recently announced plans to invest US$300 million in Mexico this year, as it is going to add 1000 more people to its payroll in the country.
Both retailers are increasingly investing in storages and distribution centers, with an aim of cutting costs for both sellers and consumers. In addition, they are focusing on offering free shipping to attract more consumers.