Workforce Payments Guide Mexico

Papaya offers Virtual IBAN accounts (or “wallets”) to hold your funds segregated and safeguarded until payments are ready to be processed. Opening and managing corporate bank accounts can often be complex and time-consuming, requiring extensive checks and due diligence.

Papaya’s Virtual IBAN solution, built on the trusted infrastructure of JPMorgan, streamlines this process-making it faster, easier, and more cost-effective while ensuring your funds are secured.

Delivery Timeline

Supported Payment Types

Payments Coverage

Salary payments, authorities payments, contractor payments.

3rd Party Payments

Contractor payments

Papaya Global supports payments to contractors in Mexico. The payout currency may vary based on the receiver bank account setup when receiving foreign currencies. it is advised for contractors to reach out to their bank to confirm how foreign currencies are handled.

Payroll payment Frequency

Bi-Monthly / Monthly

KYC

In Mexico, the Know Your Customer (KYC) process is governed by the Anti-Money Laundering Law, known as the Federal Law for the Prevention and Identification of Operations with Resources of Illicit Origin (LFPIORPI), and the Law to Regulate Financial Technology Institutions (Fintech Law). The primary objective of these laws is to gather comprehensive and accurate information about customers to prevent criminal activities.

The laws set two key obligations for entities:

1. Appropriate Identification of Customers: This involves verifying the identity of customers to ensure they are who they say they are.
2. Reporting to the Office for the Treasury and Public Credit (SHCP): Entities must report certain transactions, especially those classified as “Vulnerable Activities,” according to the established guidelines.

To meet these obligations, entities engaged in Vulnerable Activities are required to:

1. Designate a Representative to SHCP: A designated person must present reports on the transactions made.
2. Identify Customers and Users (KYC): This includes storing their information for five years and refraining from transactions classified as ‘Vulnerable Activity’ if customers do not provide identification information or documentation.
3. Present Transaction Reports: Reports with detailed information from the previous month need to be submitted from the 17th of each month, depending on the transaction amount and type of ‘Vulnerable Activity.’

The KYC process in Mexico also entails:

• Validating the Identity of Clients: Ensuring that all client information is accurate and up-to-date.
• Monitoring Operations: Continuously overseeing transactions to detect any anomalies or suspicious activities.
• Establishing Compliance and Risk Management Policies: Creating and enforcing policies to adhere to regulatory requirements and manage risks in new business relationships.
• Incorporating Digital Technologies: Utilizing biometrics, digital tools, and facial and voice recognition technologies to adhere to regulations and enhance the user experience.

Additionally, Financial Technology Institutions must maintain automated systems containing three specific lists:

1. Unusual Operations List: Tracking operations that deviate from normal patterns.
2. Politically Exposed Persons List: Identifying individuals who hold a prominent public position that may present risks due to their role.
3. Blocked Persons List: Including individuals or entities restricted or prohibited from conducting certain transactions.

These comprehensive measures and technologies ensure that the financial sector in Mexico operates with integrity, transparency, and security, adhering to both national and international standards in the fight against money laundering and terrorist financing.

Banking Regulations

Mexico has a robust regulatory framework governing its banking sector, which can impact cross-border payments and workforce transactions. Here are some key regulations:

Prudential Supervision: The CNBV ensures that financial institutions maintain adequate capital and follow sound risk management practices. This helps maintain the integrity and stability of the financial system.

Comisión Nacional Bancaria y de Valores (CNBV): The CNBV is the primary regulatory body overseeing the banking sector in Mexico. It supervises credit institutions, insurance companies, and other financial intermediaries to ensure they operate within the legal framework and adhere to established norms.

Anti-Money Laundering (AML) and Counter Financing of Terrorism (CFT): Mexico has stringent AML/CFT regulations. Financial institutions must implement measures to detect and report suspicious activities. The CNBV supervises compliance with these regulations.

Foreign Exchange Regulations: The Foreign Exchange Commission, which includes the Ministry of Finance and the Bank of Mexico, regulates foreign exchange transactions. Companies must comply with these regulations when making cross-border payments.

Banking Licenses: Various types of banking licenses are issued in Mexico, including universal banking licenses and specialized banking licenses. These licenses determine the scope of operations that financial institutions can engage in.

Consumer Protection: The Instituto para la Protección al Ahorro Bancario (IPAB) protects depositors by insuring bank deposits up to a specified limit. This ensures consumer confidence and financial stability.

International Banks

Local banks in Mexico

Payment Methods

The B2C payment tools available in Mexico include:

• Paypal
• Culqi
• Mercado Pago
• Kushki
• Riqra
• Kueski Pay
• ProPay
• Citibanamex payment processor voucher systems (also known as boletos)
• Debit cards
• Digital wallets (such as Visa Checkout, and Masterpass)
• Bank transfers.

Other tools include OXXO, Mastercard, Visa, American Express, Apple Pay, Carnet, 7Eleven, and Banamex.

Cryptocurrency