Overview

Government Digital Economy Initiatives

Overview of Mexico’s digital economy (growth and strategies).

Mexico’s digital economy has experienced significant growth in recent years, driven by increased internet penetration, mobile connectivity, and e-commerce adoption. As of 2023, according to the Mexican Federal Institute of Telecommunications, over 97 million Mexicans were internet users, representing 81% of the population. This growth has fueled a thriving e-commerce market, which is expected to reach $63 billion dollars by 2025 (Source: Statista).

Key government plans for digital transformation.

Over the past 12 years, Mexico’s digital transformation has been guided by key government initiatives aimed at enhancing digital infrastructure and promoting inclusivity. The National Digital Strategy (Estrategia Digital Nacional) has been the cornerstone of these efforts, focusing on expanding internet access via the “Internet for All” initiative, improving government services through digitalization, providing guidelines for the acquisition of technologies, and increasing financial inclusion.  Elected President Sheinbaum recently announced the creation of the Digital Transformation Agency to streamline government procedures and promote digital government.

Identifiable Trends

Current trends shaping the digital economy in Mexico.

Several key trends, including the rapid expansion of e-commerce, the rise of fintech, and the increasing importance of digital payments are shaping Mexico’s digital economy. In 2023, Mexico led global e-commerce growth with a 24.6% increase, driven by sectors such as fashion, electronics, and consumer goods, as well as the adoption of omnichannel retail strategies that blend online and offline shopping experiences​ (Sources: Mexico Business News and Mexican Association of online sales).

The fintech sector has also seen significant growth, fueled by the regulatory support of the Fintech Law, which has positioned Mexico as a leader in Latin America’s financial technology landscape.

Another critical trend is the focus on digital payments, with an increasing number of businesses and consumers adopting digital financial solutions. However, challenges such as fraud prevention continue to be areas of concern.

Emerging technologies and their impact on economic growth.

Emerging technologies such as artificial intelligence (AI), blockchain, and the Internet of Things (IoT) are increasingly impacting Mexico’s economic growth. AI and machine learning are being integrated into retail, finance, and manufacturing, enhancing efficiency and customer experiences. AI-driven solutions are rising in e-commerce to optimize supply chains and personalize shopping experiences. IoT is also playing a significant role in transforming industries such as automotive and manufacturing by enabling real-time data collection and automation, leading to more informed decision-making and increased productivity.

Competitive Environment

• Analysis of the competitive landscape in Mexico’s digital sector.

Mexico’s digital sector is becoming increasingly competitive, shaped by both domestic and international players. E-commerce giants like Mercado Libre and Amazon dominate the market. However, local companies such as Coppel and Liverpool have also become relevant by adopting omnichannel strategies. Asian platforms such as Temu and Shein have a strong presence in the market.

Mexico’s fintech sector has witnessed explosive growth, becoming one of the most dynamic in Latin America. With over 500 fintech startups operating as of 2023, the country has become a regional hub (Digital Policy Alert).  Startups like Clip and Konfío are gaining ground by offering innovative digital payment solutions and financial services tailored to small and medium-sized enterprises.

• Key players and their roles in the market.

A mix of local and international key players plays crucial roles in shaping Mexico’s digital market landscape. Mercado Libre, the leading e-commerce platform in Latin America, dominates the online retail space in Mexico. Amazon is another major player, leveraging its global expertise and extensive logistics network to compete aggressively in the market. Meanwhile, local retailers are increasingly adopting innovative strategies and solutions to improve shopping experiences and maintain their competitive edge.

In the fintech sector, local and international non-conventional banks, or neobanks, such as Albo, Klar, and Hey, are at the forefront of Mexico’s fintech transformation, offering mobile-first banking solutions that cater to a younger, tech-savvy population. These neobanks provide services ranging from digital wallets to savings accounts and investment solutions, all accessible via smartphones, which has led to increased financial inclusion, particularly among unbanked and underbanked groups. 

Market Challenges

Regulatory Environment

Data Privacy

• Overview of data privacy laws in Mexico.

Mexico’s data privacy framework is governed primarily by the Federal Law on the Protection of Personal Data Held by Private Parties which establishes comprehensive regulations for the collection, processing, and storage of personal data by private entities. The law is rooted in principles such as consent, data minimization, and the protection of sensitive data, and it grants individuals key rights over their data, including access, rectification, cancellation, and opposition (ARCO rights). Implications for businesses operating in the digital sector.

Mexico’s Federal Law on the Protection of Personal Data Held by Private Parties imposes significant obligations on businesses operating in the digital sector. Companies must ensure that they collect and process only the minimum necessary personal data and obtain explicit consent from users. Additionally, the law grants individuals strong rights over their data, such as the ability to access, rectify, or delete their information, which businesses must accommodate. Compliance with these laws requires businesses to implement robust data protection measures, maintain transparency through privacy notices, and safeguard sensitive information.  Non-compliance can result in substantial penalties, making it crucial for digital businesses in Mexico to prioritize data protection and stay updated with ongoing legislative developments​.

 AI Regulation

• Current and upcoming regulations affecting AI deployment in Mexico.

Mexico is currently in the process of developing regulations to govern the deployment of artificial intelligence (AI), with a focus on ensuring ethical standards and safeguarding personal data. According to The National Law Review, the legislative activity includes 29 proposed laws related to AI in the Mexican Congress, which aim to create a regulatory framework that balances innovation with privacy protection.

Mexico’s approach is informed by global developments, particularly in Europe and the U.S., and seeks to establish minimum ethical standards without overregulating the technology. These regulations are crucial as AI becomes more integrated into various sectors, impacting not only privacy but also areas like cybersecurity and consumer protection.

The upcoming regulations are expected to address the ethical use of AI, cross-border data flows, and the potential risks of automated decision-making, ensuring that AI deployment in Mexico aligns with both national and international standards.

The Mexican Senate, in collaboration with academia, international organizations, civil society, and the private industry, has developed a regulatory sandbox to identify the challenges and opportunities faced by local stakeholders in implementing an AI regulation. The paper will be delivered to the upcoming administration taking office on October 1, 2024.

Cross-Border Data Flows

• Regulatory frameworks governing data flows between Mexico and other countries.

Mexico’s cross-border data protection rules are primarily governed by the Federal Law on the Protection of Personal Data Held by Private Parties, which mandates that any transfer of personal data to foreign entities must ensure an equivalent level of protection as provided under Mexican law. Before transferring data internationally, businesses must obtain explicit consent from data subjects, specifying the purpose of the transfer and the destination. The law also requires that the receiving party abroad adheres to comparable data protection standards.

There are a few exceptions to obtaining consent for domestic and international transfers of personal data, which can be consulted in the link below:

 https://www.dlapiperdataprotection.com/index.html?t=transfer&c=MX

Challenges for international digital trade.

The cross-border data flow regulations in Mexico pose challenges for U.S. businesses engaged in digital trade, particularly due to the need to align with Mexico’s data protection standards under the Federal Law on the Protection of Personal Data Held by Private Parties. U.S. companies must ensure that any personal data transferred to Mexico meets these standards, which may differ from U.S. and other international regulations, creating potential operational complexities.

U.S. companies also face other challenges in Mexico related to Cross-Border Transfer of Information by Electronic Means and Location of Computing Facilities. Mexico has enacted legislation that taxes digital services and a “kill switch” sanction linked to a tax enforcement law. Mexico can block Mexican consumers from having online access to international companies that provide digital services in cases where the Mexican authorities determine that the companies are not compliant with Mexican tax laws.

Additionally, Mexico’s central bank (Banxico) and the National Banking and Securities Commission (CNBV) issued a fintech regulation that requires companies to store financial data with cloud providers based in Mexico and prohibits certain financial data from being transferred out of Mexico. This requirement could cause sensitive data to be held in Chinese-owned data storage facilities in Mexico.

Mexico has also tried to jumpstart the clause that no party can hold an internet platform liable for content found on the platform.

Cybersecurity

• Mexico’s cybersecurity policies and their influence on digital trade.

The U.S.-Mexico-Canada-Agreement (USMCA), particularly the Digital Trade Chapter, commits the countries to adopt risk-based cybersecurity mechanisms and to collaborate in building cyber incident response capabilities, ​strengthen collaboration, ​and managing risks ​. The countries understand that cybersecurity risks undermine the growth of the digital economy.

The Mexican Government has been subject of several hackings, including Mexico’s National Security Agency and Ministry of Infrastructure, Telecommunications and Transport.  Despite of that, the federal authorities have allocated less than 0.5 percent of the total IT budget to cybersecurity. Mexico has not enacted a cybersecurity legislation and there is no single competent regulatory authority. There are several cybersecurity law proposals being evaluated in the Senate.

• Key challenges for businesses in protecting digital assets.

Mexico ranks 52 out of 182 countries in terms of vulnerability to cyberattacks and is the most attacked country in Latin America. The lack of a federal regulation, and of enforcement mechanisms across the different states complicates the protection of digital assets, making it difficult for companies to ensure consistent protection of digital assets across different regions              in Mexico​. Additionally, the evolving regulatory environment, especially with the      possibility of adopting new laws targeting cybersecurity and AI, could create                         compliance difficulties. Businesses must also assess the risks of cyberattacks,    which are increasingly sophisticated and frequent in the country.

Labelling Rules

In August 2023, the Federal Institute of Telecommunications (IFT) called for public comments on the “Preliminary Draft Guidelines for using the IFT Seal in products  equipment or devices intended for telecommunications or broadcasting.” The measure, as written, would create new labeling requirements to affix the (IFT) logo to covered products, causing significant compliance costs and logistical complexities for businesses. After the U.S. Government engagement, IFT changed the rule to a) allow for an e-label, per the industry’s request, and 2) consider allowing labels on packaging and other areas of flexibility.

•  Electronic/credit card payment services

In December 2023, the Board of Commissioners of the Federal Economic Competition Commission (Cofece) issued an opinion with recommendations to promote the improvement of competition conditions in the card payment reception market in collaboration with the Central Bank (Banxico) and the National Banking and Securities Commission (CNBV). Cofece had previously published a resolution concluding that there are no conditions of effective competition in the domestic transaction processing market. The ecommendations to Banxico and the CNBV to eliminate barriers to competition and restore conditions of competition in the card payment processing market. It also ordered clearinghouses to implement compliance programs, as well as the appointment of officials to verify their implementation.

Digital Trade Barriers

• Data Localization Requirements
  • Regulations issued in January 2021 by the Central Bank of Mexico (or Banxico) and the National Banking and Securities Commissions (CNBV) entered into force in 2022, mandating electronic payments companies operating in Mexico to have in country IP solutions for cloud data storage abroad to guarantee operational continuity.
  • How these regulations impact foreign businesses.

Mexico’s digital trade barriers can significantly impact foreign businesses, especially those related to the free flow of data and digital services taxes. One barrier is Mexico’s data localization requirements, which mandate that certain types of data, particularly those involving sensitive personal information, be stored and processed within the country. This can force foreign companies to invest in local data centers or partner with local providers, increasing operational costs. Additionally, the VAT legislation for digital services requires that international companies register in person to local financial authorities, making it necessary for international firms to have a local presence o a local representative.

• Third-Country Bias/Influence
  • Overview of third-country influences on Mexico’s digital trade policies.

Chinese influences on Mexico’s digital trade policies have grown as China strengthens its economic ties in the Latin America region. China’s involvement in Mexico’s digital sector is primarily through investments in telecommunications and technology infrastructure. Chinese tech giants like Huawei and ZTE are present in 5G network deployments and provide telecommunications equipment for the country’s key telecommunications projects, which has implications for Mexico’s digital policies and cybersecurity considerations. Huawei and ZTE also have several collaboration agreements with local authorities for workforce development initiatives. 

This growing influence also raises concerns about the potential cybersecurity risks associated with non-trusted vendors.

• Examples of how these biases affect trade dynamics.

Asian giants like Shein, Temu, and Ali are gaining significant market share in Mexico. Shein recently launched a local marketplace allowing local vendors to sell on the platform, competing with Amazon and Mercado Libre. Shein is training individuals and small and medium companies that want to implement an e-commerce strategy using the platform.  Specialized media reported that in 2023, Shein invested around 6 million USD in an advertisement campaign in Mexico.

Mexico recently signaled improper practices of courier companies associated with Chinese marketplaces to avoid tax payments. As a response, Mexico imposed temporary tariffs between 5% and 50% on the import of 544 tariff items applicable to products from countries with which it does not have trade agreements, including China. The items considered include steel products, textiles, footwear, wood, plastics, chemicals, paper, electronics, transport equipment and furniture.

Digital Trade Opportunities

Cross-Sector Enabling Technologies

Communications and Networking Technologies

U.S. firms can bring communications and networking technological solutions to Mexican companies to expand and enhance network capabilities, particularly as Mexico continues to modernize its digital infrastructure. The push for advanced technologies like artificial intelligence (AI), the Internet of Things (IoT), and cloud computing in various sectors (including manufacturing, logistics, and finance) creates a demand for U.S. expertise in these fields.

Additionally, Mexico’s strong manufacturing industry offers U.S. firms opportunities to supply advanced automation technologies, robotics, and AI-driven solutions that enhance production efficiency and competitiveness. The nearshoring trend can boost the demand for cross-sector enabling technologies, as businesses seek to optimize operations and reduce costs.

Mexico’s growing e-commerce sector, fueled by an increasing number of internet users and digital payments, provides a fertile ground for U.S. firms specializing in cybersecurity and digital payment solutions.

Advanced Computing

• Impact of advanced computing on various sectors in Mexico.

Advanced computing technologies, such as artificial intelligence (AI), big data analytics, and cloud computing, are having a transformative impact on various sectors in Mexico. In manufacturing, these technologies enhance processes through automation, leading to increased efficiency. The financial sector benefits from advanced computing through improved risk management, fraud detection, and personalized financial services, which drive innovation in fintech. In healthcare, some hospitals are exploring using big data and AI to enable more accurate diagnostics and personalized treatments, improving patient outcomes.

The adoption of these technologies is still limited in Mexico, although it is expected to grow driven by Mexico’s strategic position in global supply chains.

• Human-Machine Interfaces
  • Emerging trends in human-machine interaction within the Mexican market.

Emerging trends in human-machine interaction within the Mexican market are currently driven by the still limited adoption of advanced technologies like artificial intelligence (AI), virtual reality (VR), and robotics across some sectors.

In the retail industry, there is a growing use of AI-powered chatbots and virtual assistants to enhance customer service, providing personalized experiences and streamlining online shopping processes.

Some manufacturing companies are integrating collaborative robots, or “cobots,” which work alongside human workers to increase efficiency and safety on production lines. The Mexican market represents some opportunities in human- achine collaboration across some industries​.

Opportunities for innovation and development.

Mexico offers some opportunities for innovation and development in human- machine interaction, driven by the country’s growing digital transformation and its strategic importance in global supply chains.

One key area is the integration of AI-powered tools and robotics in manufacturing,  where there is a demand for technologies that can enhance productivity while ensuring safety and collaboration. The near-shoring trend is expected to raise the   number of smart factories in Mexico, creating some opportunities for advanced human-machine interfaces.

In the healthcare sector, there is limited potential for innovations in telemedicine and AI-assisted diagnostics.

As e-commerce continues to grow, there is a strong need for advanced customer service technologies, like AI-driven chatbots and virtual assistants, that can provide personalized interactions.

Artificial Intelligence

• Growth of AI in Mexico and its cross-sector applications.

The growth of artificial intelligence (AI) in Mexico is accelerating, with applications across multiple sectors, particularly manufacturing, finance, and retail.

In the manufacturing industry, AI is being utilized to enhance automation and quality control, boosting productivity and reducing costs. The financial sector is increasingly adopting AI for risk management, fraud detection, and personalized banking services. The retail sector also benefits from AI through personalized    marketing and customer service solutions.

AI will play a crucial role in Mexico’s smart city initiatives, where it can be used to optimize urban planning, traffic management, and public safety. As the country continues to invest in digital infrastructure the potential for AI-driven solutions is growing.  

The government has expressed interest in developing a robust regulatory framework and fostering innovation through public-private partnerships to support the growthof AI.

• Strategic opportunities for AI-focused businesses.

AI-focused businesses have some strategic opportunities in Mexico due to the   country’s growing digital economy:

1. Manufacturing sector: AI can be used to enhance automation, predictive maintenance, and supply chain optimization, particularly in Mexico’s robust automotive and electronics industries. This aligns with the trend of nearshoring, as companies seek to streamline operations closer to the U.S., making AI solutions that improve efficiency highly valuable.
2. Financial services: also offers strategic opportunities, with a growing demand for AI-driven risk management, fraud detection, and personalized financial services. Mexico’s fintech industry is booming, supported by a large unbanked population.
3. Healthcare: limited opportunities exist in Mexico, where AI can address critical challenges by improving diagnostics, streamlining patient care, and supporting telemedicine.
4. Smart cities: some states have smart cities initiative, where AI can be deployed to optimize urban planning, traffic management, and public safety.
5. Education presents some opportunities for AI companies to develop personalized learning platforms, virtual classrooms, and AI-driven educational tools.

Specific Industry Sub-sectors

Financial Technologies (Fintech)

Due to the growing importance of the fintech industry in Mexico, financial regulators drafted the first Mexican financial technology regulation law to reduce operational risk, enhance transparency, and improve security.

Mexico’s Financial Technology (FinTech) law came into effect in March 2018, and the administration released secondary regulations in 2019, creating a broad rubric for developing and regulating innovative financial technologies.  The law covers both cryptocurrencies and a regulatory “sandbox” to test the viability of products, placing Mexico among the FinTech policy vanguard. 

The Mexican Banking Commission (CNBV) authorizes and supervises fintech companies’ operations in Mexico. They must comply with prudential rules on financial, operational, and technological risks. The Mexican Central Bank (BANXICO) will regulate virtual assets.

With over 650 fintech companies, Mexico is the third-largest fintech market in Latin America after Brazil and Colombia. Mexico’s Fintech law regulates the following services: crowdfunding and peer-to-peer (P2P) lending, electronic money services, virtual assets, application programming interfaces (APIs), and open banking.

The sector’s major opportunities are in the following sub-industries per market share: Fintech as a service (41%); P2P and mobile payments (32%); crowdfunding and personal loans (16%); financial assets (5%); Insurtech (2%); Wealth Management (2%); and independent digital banks (2%).

The growing number of Mexican micro-financial institutions also represents market opportunities for U.S. companies seeking financing, consulting, risk management, and banking technology. As the industry evolves, micro- finance firms will seek to improve efficiency, track operations more accurately, increase transparency, and acquire new clients.

Also, in January 2019, BANXICO, SHCP, and the CNBV announced a new payments system through Quick Response (QR) codes. The system called “Cobro Digital” (CoDi) is part of the government’s efforts to increase financial inclusion and reduce the cash economy. CoDi’s users/customers must have a smartphone and a bank account. The sellers must have a static QR Code, a smartphone to download the CoDi app for face-to-face transactions, or a web page to generate the CoDi requests for online sales. 

The COVID-19 pandemic accelerated the mobile/contactless payments trend that had already begun in Mexico. Embedded finance, or the possibility of offering financial services through different platforms, represents a good opportunity for fintech companies to partner with retailers and other industries. 

In Mexico, over 75 percent of the population has a mobile phone. Many customers rely on their mobiles to conduct financial transactions. This provides opportunities for new and improved processes for sending and receiving payments. 

Open Banking also offers good opportunities in the market. Mexican regulators established two sets of provisions requiring financial institutions to share data through Application Programming Interfaces (APIs). These APIs allow fintech to communicate with a bank server and access client information. In June 2020, the CNBV issued General Provisions on APIs. 

In addition, in March 2020, BANXICO published the first rules for open banking, which are applicable only to credit information entities and clearing houses. The reforms and policies implemented by BANXICO opened the market for new entities to participate in the payments industry, including clearing houses, specialized service providers, aggregators, acquirers, issuers, etc.

Insurtech is quickly expanding in the Mexican market and represents opportunities for U.S. companies, especially in the value chain segments. These include front office, claim servicing and payout, policy acquisition, and subscription, among others. 

Key players and investment opportunities.

• Mexican Banking Infrastructure

The banking system’s competitive environment has led to new entities focused on specific niche markets, such as automotive, personal, mortgage, and business lenders. Currently, 48 banks operate in Mexico; seven (Bancomer, Banamex, Santander, Banorte, HSBC, Inbursa, and Scotia Bank) have 79 percent of the market share by total assets. 

According to the Mexican Banking Commission, in June 2024, the Mexican Banking Infrastructure consisted of 18,089 bank branches, 53,190 banking agents, 67,035 ATMs, 1,413,194 POS, and 87,363 accounts linked to mobile phones.

• Banking Technologies

Mexican banks continually invest in technology to achieve cost savings and become more competitive. As new financial players and banks enter the banking industry, the challenge of technological integration becomes more challenging.

Effective use of technology gives lenders an advantage over competitors, as the lender will be better positioned to serve their customers and lower their costs. For this reason, technology is changing the efficiency of financial institutions. Also, Mexican financial authorities have worked to foster the development of diverse initiatives and products to increase Mexican financial inclusion.

• Banking Agents

Since the last decade, Mexican financial authorities have authorized an entity called “banking agents,” which are convenience stores or retail stores that can serve as points for loading and withdrawing cash and processing payments. Banking agents are expanding rapidly in Mexico because banks use their facilities and infrastructure to complement mobile payments.

According to the Mexican Banking Commission, Mexico has 53,190 banking agents. The largest banking agent network is the convenience store OXXO, with more than 18,000 stores.

• Mobile Payments

One of the Central Bank’s (BANXICO) objectives is to promote the development of the Mexican payments system.

The Central Bank supervises the operation of the Interbank Electronic Payments System (SPEI), which is used for large and retail payment transactions. It regulates the retail payment systems: electronic funds transfers, card payments, direct debits, and checks.

Mexican financial authorities have developed and launched various initiatives to promote financial inclusion and improve access to mobile payments. As a result, the Central Bank established new rules for opening mobile accounts based on the transactional limits and risks implied by each account. This regulation allowed the association of mobile phone numbers to bank accounts.

Other regulatory changes have facilitated the entry of new participants, aggregators (i-Zettle, Pago Fácil, Mercado Pago, etc.), clearing houses, new non-bank issuers, and specialized companies in card processing (issuing and acquiring).

The main challenge that banks face is gaining consumer trust, especially regarding security and convenience in processing electronic banking payments.

•  Cybersecurity
  • Growth of the cybersecurity market in Mexico.

The U.S.-Mexico-Canada-Agreement (USMCA), particularly the Digital Trade Chapter, commits the countries to adopt risk-based cybersecurity mechanisms and to collaborate in building cyber incident response capabilities, ​strengthening collaboration ​and managing risks ​. The countries understand that cybersecurity risks undermine the growth of the digital economy.

The Mexican Government has been subject of several hackings, including Mexico’s National Security Agency and Ministry of Infrastructure, Telecommunications and Transport.  Despite of that, the federal authorities have allocated less than 0.5  percent of the total IT budget to cybersecurity. Mexico has not enacted a cybersecurity legislation and there is no single competent authority. There are several cybersecurity law proposals being evaluated at the Senate.

Mexico ranks 52 out of 182 countries in terms of vulnerability to cyberattacks and is the most attacked country in Latin America. According to Gartner Consulting,      cybersecurity market revenue in Mexico is expected to show an annual growth rate      (CAGR 2023-2028) of 8.11%, resulting in a market volume of US$3.19 billion by 2028.​ There is an important presence of international cybersecurity companies,        and the market is quite competitive. The enterprise sector prefers local presence and support, is brand-driven and looks for state of the art solutions. Some medium companies are still in the early adoption stages.   

Critical areas for investment and development.

The primary market opportunities for U.S. firms in the sector are:

• Threat detection and prevention solutions: Advanced solutions for the early identification and mitigation of cyber-attacks, including Artificial Intelligence and behavioral analysis.
• Critical Infrastructure Protection: Solutions designed to ensure the integrity of critical infrastructure, such as energy, transportation, and communication systems (for the private sector).
• Security of electronic payments: Solutions to guarantee the security of electronic transactions, including fraud prevention and authentication solutions. The Mexican Association of Online Sales has identified cybersecurity concerns as a primary obstacle to the growth of e-commerce in the country.
• Cybersecurity education and training: programs focused on professionals and the private sector, emphasizing awareness of cyber threats and best practices. It is estimated that the country needs around 260,000 workers in the cybersecurity sector.

As the market evolves and cyber risks increase, awareness about the importance of protecting digital infrastructure and sensitive data is expected to strengthen, fostering market growth.

Internet of Things (IoT) and Smart Cities

• Adoption of IoT solutions and smart city initiatives in Mexico, key projects and potential partners.

The adoption of IoT solutions and smart city initiatives in Mexico is gaining  momentum. Mexico City has been at the forefront, implementing smart  technologies to improve urban living. For example, the Ciudad Segura (Safe City) project has integrated IoT with over 15,000 security cameras across the city to enhance public safety and traffic management.

Another significant project is the Smart Puebla initiative, where the city of Puebla has implemented IoT solutions for smart lighting, waste management, and public transport. These initiatives are part of a broader push to enhance urban sustainability and efficiency across Mexican cities.

The Mexican government and international organizations like the Inter-American evelopment Bank (IDB) are crucial stakeholders, providing funding and support for the expansion of smart city projects.

Local companies are key players in the implementation of IoT solutions and smart city technologies across Mexico and represent opportunities to partner with U.S. industry. There are five cities in Mexico aiming to become smart cities: Tequila, Jalisco; Ciudad Madera, Queretaro; Mexico City; Ciudad Creativa Digital (Jalisco); Puebla, Smart City

 Software and Digital Services

• The role of software and digital services in Mexico’s digital transformation.

Software and digital services play a crucial role in Mexico’s digital transformation, driving innovation and enabling the country to compete in the global digital economy.

Mexico is positioning itself as a high-quality software developer to the manufacturing, aerospace, and finance industries. There are 38 IT clusters throughout the country offering software  development, call center, high-tech  manufacture, and engineering services. Some states have presented plans to develop new technology clusters as part of President’s Lopez Obrador ambitious strategy to develop the country’s southern region.

According to a study published by the media intelligence firm “Meltwater”, Mexico is one of the fastest-growing mobile app markets in the world. There were 5.08                billion mobile app downloads in Mexico during 2022, representing a 5.6 percent increase compared to the previous year. Mexican users spent USD 711.4 million in the app stores during 2022; this is USD 211.4 million more than during 2021. Specialists predict that total revenue in the Mexican apps market is expected to show an annual growth rate of over 8 percent, resulting in a projected market volume of USD 3,658 million by 2027.

Opportunities for foreign companies in the Mexican market.

• Artificial intelligence (AI) focusing on finance and manufacturing
• Big data analytics
• Enterprise software solutions that can enhance operational efficiency and innovation.
• Digital payment systems
• Cybersecurity

Telecommunications

Overview of Mexico’s telecommunications infrastructure.

For the past decade, the Mexican telecommunications market has consistently outpaced GDP growth, driven in large part by mobile telephony, broadband, and broadcasting. According to the Mexican Institute of Telecommunications, in 2022, Mexico had over 130 million active wireless lines, over 113 million of those had     Internet access. It is expected that there would be over 138 million active wireless  lines by the end of 2032. America Móvil dominates the market with a 61.9 percent share in terms of number of lines compared to Telefónica’s 17 percent and AT&T’s 15.6 percent. Virtual Mobile Operators (VMO) account for five percent of the  market. Walmart’s VMO has shown a significant growth and accounts for 2.4 percent of the market.  The three main operators have launched 5G commercial services in the country’s main cities. America Movil’s Telcel and AT&T are working to  expand their current coverage, however the update is expected to be slow. 5G is expected to account for approximately 43 percent of the market by 2032. Telefonica has disposed its Mexican mobile assets and has a network sharing agreement with AT&T.  Telmex is the dominant player in fixed broadband with a 41.8 percent market share in terms of subscriptions compared to Televisa at 25.2     percent, Megacable at 4.9 percent. The telecommunications Mexican market grew by 4.5 percent during 2022.

In July 2021, Grupo Altan, the consortium responsible for deploying and administering the National Shared Wholesale Network (NSWN), known as Red   Compartida filed for bankruptcy protection. In June 2022 Altan received USD 388 million in the form of a credit package from Mexico’s development bank and stakeholders. This operation transferred majority ownership of the shared network to the Mexican government. The Red Compartida had compromised to provide coverage to 92 percent of Mexico’s population by 2021, however it has requested an       extension in two occasions. The new commitment contemplates reaching the promised coverage by 2024. CFE Telecommunications and Internet for All, a subsidiary of the Federal Electricity Commission, announced in August 2024 the intention to buy the debt of ALTAN, to take control of the network and include it as a key component of the internet for all initiative.

Growth opportunities in the sector.

Some opportunities exist for satellite companies providing connectivity solutions  for underserved areas, solutions for Virtual Mobile Operators, and O-RAN, wireless communication solutions, and 5G software to target the main two telecommunication providers

Digital Economy-Related Trade Events

 Key Events and Conferences

• Mexico Tech Week: https://www.mexicotechweek.mx/
• Congreso America Digital Mexico https://mx.america-digital.com/
• Wired Summit Mexico https://events.wired.com/wired-summit-mx
• InfoSecurity Mexico https://www.infosecuritymexico.com/es.html
• Mexico Business Sumit https://mexicobusiness.events/business-summit
• Smart City Expo LATAM https://smartcityexpolatam.com/
• Mexico Digital Summit Mexico Digital Summit – LA ERA DE LA INCLUSIÓN Y LA INTELIGENCIA ARTIFICIAL

For information about telecommunications, digital economy, and cybersecurity contact:

Adriana Carrillo

Commercial Specialist

U.S. Commercial Service—Mexico City

Adriana.Carrillo@trade.gov

Tel: + 52 55-5080-2000 ext. 5220

For more information on the fintech sector, please contact:

Sylvia Montano

Commercial Specialist

U.S. Commercial Service—Mexico City

Tel: +52 (55) 5080-2000 Ext. 5219

Sylvia.Montano@trade.gov