by Noe Torres
MEXICO CITY (Reuters) – Money transfer company Western Union on Wednesday announced an agreement with Mercado Libre to allow digital remittances to Mexico.
Both companies said the partnership would allow families abroad to send money via Western Union, while those living in Mexico would be able to receive money through Mercado Pago.
“As much as time we save people who don’t have to go to a physical location to withdraw cash, we think it’s a significant advantage and … you don’t have to move that money from place to place is,” said. Pedro Rivas, director of Mercado Ped in Mexico.
According to the companies, more than 70% of transactions are currently collected in cash in Mexico, where low banking penetration means more than 126 million of its people do not have a bank account.
Funding shipments to Mexico took in a record $5.17 billion in May, largely due to the economic recovery in the United States, the number 1 destination for migrants from the Latin American nation.
Mexican President Andres Manuel López Obrador, who often claims solid growth in remittances received by Mexico, said they could reach a record $60 billion this year, up 16% from 2021.
However, experts warn that cash flows could slow due to the impact of the expected slowdown in the United States in the coming months.
“In the first half of 2022, there are several negative signs for US economic growth that pose a downside risk to remittances,” said Gabriella Siller, director of research at local firm Banco Base.
(by Noé Torres)