Banxico Eases Rules and Promotes Competition in the Payroll Loan Market
The Bank of Mexico (Banxico) recently announced a regulatory change that will allow Mexican workers to use their employment benefits, including their payroll, to pay off loans taken out with any bank—not just the institution where they receive their salary. This new provision, published in the Official Gazette of the Federation, aims to give workers access to better credit conditions by fostering greater competition among financial institutions.
Until now, payroll loans were mostly tied to the bank where workers received their wages, limiting financing options and the ability to negotiate better rates or terms. With this adjustment, any institution will be able to offer loans backed by payroll, which is expected to broaden the supply and lead to more competitive interest rates for consumers.
Banxico emphasized that the measure not only promotes competition but also gives workers more freedom to compare and choose the financial product that best suits their needs. Additionally, it introduces the option to pay off these loans via direct debit using the Interbank Electronic Payments System (SPEI), which will streamline and modernize the payment process for borrowers.
According to data from the National Banking and Securities Commission (CNBV) as of May 2024, payroll loans account for a portfolio totaling over 414 billion pesos. BBVA, Banorte, and Banamex currently hold the majority of this market share, having benefited from previous rules. With the change, new players are expected to enter the market, driving greater dynamism.
This relaxation of rules in the sector comes at a time when consumer credit and personal financing have been growing steadily, yet challenges remain regarding access to and inclusion in financial services for large segments of the population. By making portability and competition easier, this decision could incentivize better practices among banks, though it will also require continued efforts to strengthen financial education in order to prevent over-indebtedness and protect workers’ rights.
In the medium term, the measure could help boost the domestic economy by offering more accessible credit alternatives to salaried workers and potentially encouraging internal consumption. However, the ultimate impact will depend on how the institutions adapt their offerings and the regulatory authority’s ability to ensure responsible lending practices.
In summary, relaxing the rules for payroll loans marks an important step toward modernizing and promoting financial inclusion in Mexico, benefitting workers through greater choice, competition, and efficiency in the banking market. However, its success will depend on the sector’s performance and ongoing regulatory oversight.
