Mastercard to become Mexican clearinghouse

Mastercard will begin operations in Mexico as a clearinghouse for card payments in 4Q19, adding a third competitor to the highly concentrated market.

The move follows central bank authorization to operate as a clearinghouse in December, coming as the firm seeks to incorporate more financial institutions and fintechs into the payment system arena.

Eder Almeraz, Mastercard's director of product development and innovation for Mexico and Central America, said in an interview with media outlet Expansión that this rollout is not Mastercard's first attempt at entering the market as a clearing house, balking in 2014 due to a lack of clarity with the rules with regard to competition and international standards.

"There is an overture from all the players, [the central bank], the [commercial] banks and the [bank regulator CNBV] to bring in more participants," Almeraz said.

In Mexico, there are only two clearing houses operating: E-Global, the property of BBVA Bancomer and Citibanamex, and Prosa, which is jointly owned by HSBC México, Santander México, Scotiabank, Banorte, Invex and Banjército.

Efforts were made through the structural reforms to the country's financial system in 2014 to encourage the creation of new clearing houses but it took action from the nation's competition watchdog (Cofece) to get the wheels moving on Mastercard's entry.

In October 2018, Cofece opened an investigation into possible entry barriers in the clearinghouse market for credit and debit card transactions, looking at the rates, quotas and protocols utilized by clearing houses.