What’s going on with you–(Pay)pal?

At the beginning of September, when I opened my Paypal account to count my pennies, there was a message about some changes that would be coming up on September 25. It seemed a kind of a random date and I didn’t really understand what was going on. I sent an email to Paypal customer service to ask for clarification. This is what I received in return:

PayPal is making some changes to its User Agreement that will be effective as to all Mexican PayPal users as of September 25, 2019. We encourage you to review this Policy Update and familiarize yourself with all the changes that are being made. 

Amendments to the User Agreement

 

• We are disabling the use of balance and implementing an Automatic Transfer feature to your Designated Bank Account (currency conversion fees may apply).

• We are modifying the currency conversion fees for sending payments. 

• We are disabling the Mass Payment/Payouts feature.

 

So on the morning of September 25, I signed in and manually transferred most of my balance to my Capital One 360 bank account, just in case. I then held my breath and crossed my fingers. I checked in again and the wrong bank account was scheduled to receive the automatic balance transfer. So I changed that. And waited. Everything went fine.

The next day I discovered that I couldn’t use Paypal to pay for anything. Prior to these new changes, I could use my balance (which no longer existed) or withdraw funds from my Capital One 360 account for the purchase. Not happening anymore. 

Since I am paid for one of my jobs via Paypal, on Monday of the following week, money went in and then just sat there. It wasn’t automatically transferred. I couldn’t transfer it manually. So now what was going on? I sent another message to Paypal which went unanswered. In the morning, I called them up. 

There was “a usually high number of calls” (at 7 am) but a representative would be right with me. When I did talk to one, I explained my situation. The nice young lady said there was a glitch and the money wasn’t being transferred automatically like it should be. So she told me to go to www.paypal.com/wdfunds and I could transfer from there until this problem was fixed. I did and I could. I asked how long it would be until things were back on track. Maybe this weekend was her reply but not with any real conviction. 

So what’s going on in the banking world here in Mexico? It apparently has something to do with Fintechs and the LEY PARA REGULAR LAS INSTITUCIONES DE TECNOLOGÍA FINANCIERA instituted by former president Peña Nieto in March of 2018. The law is being pushed forward by current president AMLO and includes “electronic payment processors” like Paypal. 

It seems that AMLO has this idea that money laundering is going on through Paypal. With all money being routed directly to Mexican bank accounts, the government will have a better handle on remittances and of course be able to collect taxes on those funds. 

This isn’t the first move in complete governmental control of money in Mexico. In August, AMLO was pushing to make all tolls and gas payable through CoDi (Cobro Digital), a digital payment system controlled directly by the Bank of Mexico. This new method of payment went online just a few days ago.

There are a number of reasons why this move concerns me. In Mexico, only 2 out of 5 Mexicans even have bank accounts. Making gas and other items only available for purchase with a bank card means there will be a flurry of black market items bought, things bought by those who have the bank card who then turn around and sell it for a profit to those who don’t have a bank card. 

Then there’s the fact that in order to access your digital payment platform, you need internet access, something that isn’t reliable at all in Mexico, not even in the capital where CoDi will be enforced in less than a month even among the street cart vendors. 

And then there is the smartphone needed to scan the barcode to make the purchase. I don’t have a smartphone. My husband doesn’t have a smartphone. My son doesn’t have a smartphone. No one I know has a smartphone. Estimates show only 40% of the entire population of Mexico own smartphones. 

Still, another issue is the overall unreliability of banks and bank technology in Mexico. In August, Banorte, HSBC and Santander customers couldn’t use their cards to make purchases because of some glitch. In May, Monex Casa de Bolsa debunked with millions of dollars, never to be heard from again. In June, Mexico froze bank assets of suspected human traffickers (which in theory sounds good however how easily funds can be seized is astonishing).

So where does that leave us? A cashless society isn’t a feasible option for Mexico and yet it’s moving along at a train wreck waiting to happen pace. So my advice is “Buckle up, it’s going to be a bumpy ride!”