MEXICO CITY - US-based money transfer firm Western Union Co, announced on Wednesday that it would send digital remittances to South American e-commerce giant MercadoLibre to Mexico, which has become a lifeline for the weakened local economy.
The partnership will allow families abroad to send money through Western Union, while those in Mexico can collect the payments through Mercado Pago, MercadoLibre's digital finance arm.
Pedro Rivas, director of Mercado Pago in Mexico, said that it's important that people don't have to go to a physical location to pick up the remittance, and we think that's an important advantage, because you don't have to carry that cash from one place to another.
Major chains in Mexico, such as McDonald's, Domino's Pizza and Starbucks, are increasingly accepting Mercado Pago as a form of payment.
More than 70 per cent of remittances are currently collected in cash in Mexico, where less than half of its 126 million inhabitants don't have an account, according to the companies.
In May, payments to Mexico reached a new record amount of $5.17 billion dollars, largely due to the economic recovery in the United States, the No 1 destination of migrants from the Latin American nation.
President Andres Manuel Lopez Obrador, who is known for the strong growth in the remittances received by Mexico, has said they could reach a record US $60 billion dollars this year, a 16 per cent increase from 2021.
The flow of money could decrease in the coming months due to the impact of an expected recession in the United States, according to experts.
Gabriela Siller, director of research at Banco Base, said there are several negative signs for US economic growth, which are a downside risk for remittances in the first half of 2022.