Spain’s Second Largest Lender, BBVA, Escalates Its War on Cash in Mexico

Some banks will do just about anything to try to wean their customers off using physical money, including (in the case of BBVA) charging their customers for using cash too often. 

Just over a week ago, customers of BBVA Mexico, Mexico’s largest bank by customer base, reported on social media that the bank had begun charging them for using their debit cards to withdraw money from the bank’s ATMs. They said they had not been informed of the new charges, which can run as high as 50 pesos per month. Many of the customers were livid because the bank had previously pledged that handling debit cards and payroll accounts would not generate charges.

The bank responded, through distinct media channels, by explaining to customers that from now on they only be allowed four free ATM withdrawals per month with their debit cards. If a user goes over that limit and makes between five and eight withdrawals, they will have to pay a so-called “membership” fee of 25 pesos at the end of the month. If you make more than eight withdrawals a month, the fee goes up to 50 pesos.

Fifty pesos is roughly $2.40 in U.S. money, which may not seem like much. But it is still enough to sting, especially in a country like Mexico where roughly 30% of the population live in poverty, according to the latest data from the Economic Commission for Latin America and the Caribbean (CEPAL). That number is growing as economic conditions become more precarious and inflation drives the price of basic necessities ever higher.

Paying to Access Your Own Money

But it is the principle that matters most here: bank customers are being forced to pay a fee to access their own money. And the solution being promoted by the bank that will allow the customers to avoid paying that fee is to log onto BBVA’s banking app and preorder the cash before visiting an ATM. The app generates a code for the operation the customer requests. Then he or she goes to the ATM, inputs the code and out comes the cash.

BBVA calls this service “Mobile Cash” and it offers customers a means of withdrawing cash without needing to use their wallet; they just use your phone instead. The problem for the bank is that many of its customers in Mexico would seem to prefer to continue using their debit card. So the bank has decided to give them a bit of a nudge by charging them for doing things the old way.

Ultimately what BBVA is hoping to accomplish is to encourage those of its customers who still haven’t downloaded its banking app to do so — and to start using it. By the end of 2021, 15.1 million of BBVA Mexico’s 24 million customers had become digital users, 30% more than in 2020. But roughly nine million haven’t. They are continuing to bank the old fashioned way, using cash and cards rather than apps and blockchain (something else BBVA is heavily investing in).

Getting Rid of Cash (Or At Least Trying To)

Like many large lenders, BBVA would like nothing more than to get rid of cash. In 2019, the managing director and vice-president of BBVA Mexico, Eduardo Osuna, said one of the bank’s long-term goals was to eliminate cash altogether. “Seventy-four of [Mexico’s] population is informal and this is a huge opportunity to lend them money,” Osuna said during a meeting of chief execs in 2019. “We must combat the use of cash,” .

Fifty-three percent of Mexicans still don’t have a bank account, according to a survey by Mexico’s National Institute of Statistics and Geography (INEGI). Most of those that do tend to live in urban areas and are relatively well off. One of the reasons why so many people still don’t have a bank account is that the banking system is not inclusive enough, concluded the INEGI report. For example, bank fees tend to be much higher in Mexico than in Spain and the U.S. though banks have reduced the fees somewhat following government pressure.

But now BBVA is using fees as a stick to try to wean its customers off cash. At the same 2019 meeting of senior BBVA executives Hugo Nájera, general director of business development at BBVA, said that cash is not only inefficient but also facilitates tax evasion. “The best thing we can do,” he said, “is get rid of [it].”

These sentiments were echoed in December 2020 by BBVA’s chief economist, Carlos Serrano Herrera, who wrote an Op-ed in El Financiero calling on Mexico’s AMLO government to “wage war on cash”:

It facilitates tax evasion and corruption (we Mexicans have become accustomed to watching videos in which corrupt politicians accept bribes in cash). In this regard, World Bank studies show a high correlation between the extent of cash use in a country and the perceived levels of corruption… Because it is so difficult to trace, cash also facilitates organized criminal activities. Cash is also a fertile ground for informality, a very serious problem in our country as evidenced by the fact that 62% of companies and 56% of workers are informal, according to Inegi data.

It is always interesting to hear senior bank executives complain about how cash is facilitating tax avoidance and evasion, especially when the bank they work for is among 36 large European lenders accused by the Paris-based EU tax observatory of using tax havens extensively to reduce their tax bill. BBVA also faces tax evasion and money laundering allegations in Argentina.

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