What comes to mind when we bring up the 1990s?The end of the Cold War? The Oslo Accords? Your team winning back-to-back championships at the Copa America?

Well, today we’re going to talk about Mexico and the United States (US). So inevitably, we have to turn back the clock a bit and discuss the North American Free Trade Agreement (NAFTA), implemented in 1994, which created the world’s largest free trade bloc when measured by Gross Domestic Product.

This agreement bound together the economies of Mexico, Canada, and the US into a sprawling free trade area spanning from Alaska to Chiapas. Negotiated between the three countries over the course of the early 1990s, NAFTA’s ratification has led to the widespread slashing of tariffs and subsequently a high degree of economic integration for North America’s three largest countries.

Partially as a result of free trade with its northern neighbors, Mexico’s economy has nearly tripled in size since 1994. Meanwhile, its commercial profile has been irrevocably altered—the US and Canada serve as the country’s largest trade partners, in contrast with much of the rest of Latin America.

While the US makes up just about 43% of Mexico’s total imports, it’s in Mexican exports to the north that we see just how much this relationship has deepened over the years. The two economies move in sync today, and when US consumers and businesses want to buy quality foreign goods at a fair price, Mexico is by far the key provider.

As a result of this, Mexico’s 1994 trade deficit with the US has become a $150B trade surplus last year.

Evidently, Mexican exports are on a roll, as the country’s businesses have capitalized on their comparative advantage and proximity to the world’s largest consumer market. But what exactly are Americans buying en masse from their southern neighbors? As it turns out…a little bit of everything.

Mexican companies ship computers, electronics, machinery, plastics, oils, and a whole lot more to the US. They fit perfectly into both US and Canadian supply chains when it comes to manufacturing, agriculture, and most notably high-value technologies such as cars.

In fact, vehicles make up Mexico’s largest export category, as both regional and international firms use the country’s great trade terms – and ideal geographic location – to set up factories. But more on that later.

Given this level of export activity, as well as Mexico’s famously hard-working and resourceful labor force, it should be no surprise that just last August the country displaced China as the number-one trading partner for the United States. With Canada maintaining a solid second place, this shift reflects a growing trend in the US away from China and towards more traditional trading partners closer to home.

While by no means this reflects an actual decoupling of the intertwined economies of the US and China, a few things have spelled trouble for the commercial relationship of the world’s two largest superpowers. Trade disputes and increased geopolitical competition between Washington and Beijing have played their part, especially since the imposition of sweeping US tariffs in 2018, as has a general slowdown in China’s economic growth.

Then there are the supply chain disruptions seen throughout the years of the pandemic and afterwards, as crises from Eastern Europe to the Middle East have made investors and business leaders increasingly cautious. And though trade is rarely a zero-sum game, the past few years have demonstrated that Mexico has more to gain than perhaps anybody from this new trend prioritizing nearby trading partners and allies—what’s often called nearshoring or ally-shoring.

Setting aside the multitude of reasons we’d argue Mexico is a perfect destination for a new investment or production facility, there’s clearly elements of both geography and complementarity at play. Decades of cross-border transactions have integrated the North American economy to such a degree that today each US state has its own fascinating trade connection with Mexico.

Don’t believe us? See for yourselves.

As we touched upon earlier, the automotive industry forms a key part of the great North American regional economy. This has been the case under both NAFTA and the subsequent United States—Mexico—Canada Agreement (USMCA), which was signed in 2018 but essentially modernized the existing agreement. The market for light and medium vehicles in North America was estimated in 2020 to be worth over $700B.

From auto-parts and related goods to finished vehicles, transportation equipment remains the largest two-way trading category between Mexico and many US border states across the Southwest and Midwest. This list includes Texas, California, and (interestingly) Michigan, the former auto capital of the world and a border state on the other side of the country. Part of this continued vehicular dominance is in no small part due to a USMCA provision requiring automakers to source at least 75% of their car parts from North American sources.

Each of the US states explored above have an intricate transnational relationship with their Mexican counterparts, particularly those in the north of Mexico. These border states naturally have an edge in that other states’ goods might need to flow through them to reach the US. The state of Chihuahua, for example, exported over $70B worth of goods last year, with a special focus on computers and electronics. Meanwhile, transport equipment dominates in the exports of states such as Coahuila, Nuevo León, and Tamaulipas.

So trade across the Rio Grande is evidently just as important for Mexico’s economy as it is for the US one, if not more. For decades now, the bilateral commercial relationship has been responsible for millions of jobs across central and northern Mexico, especially since the Border Industrialization Program of 1965 and the cropping up of tariff-free factories known as maquiladoras.

In fact, such close integration with the US may well have led to Mexico avoiding the path of many of its counterparts down in South America, which have struggled to industrialize and leave behind agriculture and primary extractive industries as their economic engines.

Today manufacturing plays a significant role in the Mexican economy alongside trade in both high-value goods and services. And this is likely to persist, given that over half of the staggering $36B invested into Mexico last year went to manufacturing—led, of course, by the auto industry.

With all of this foreign capital entering the economy, it’s little surprise that Mexican unemployment is at an all-time low of under 3%, while real wages are climbing. Commerce and manufacturing alone account for over a fifth of all Mexican jobs, while the service industry provides nearly an additional 15%.

But whether it be due to agricultural, energy, or manufactured exports, it’s undeniable today that the US–Mexico commercial relationship is critical for both countries, despite any political arguments to the contrary.

Last year, two-way trade reached just shy of $800B. For reference, that figure is roughly half the size of Mexico’s total GDP. Decades of policy cooperation, economic push-and-pull, and deepening integration have led to complementary industries in each country, where today the average car part will cross a North American border eight times throughout the manufacturing process.

This level of integration rivals that of even other developed regions such as the European Union. It builds upon each North American country’s comparative advantages and key resources. And from Tijuana to Brownsville, from Mexico City to Washington D.C., the US—Mexico relationship grows the prosperity and success of both countries.

Twenty years ago, history was made.

Mercado Libre (MELI), the Argentinean retailer which had itself been launched just four years earlier in the dot-com heyday of 1999, was riding high following successful entries into major markets such as Brazil and Mexico. The company’s leadership rolled out a new secure system to diversify payment options on its online marketplace and serve as a trusted escrow between buyers and sellers.

This new payment system was called Mercado Pago, and it’s a prime success story for the fintech (“financial technology”) craze taking Latin America by storm. In fact, despite predating the worldwide explosion of fintech interest by more than a decade, it’s quite clear the company, which handles all financial services for the greater MELI ecosystem, is here to stay.

Mercado Pago’s leadership clearly predicted the fintech boom that has made Latin America one of the most dynamic regions in the world for banking services. But how has it done in the twenty years since its founding?

Well, you tell us. The company reached 53M active fintech users in the final quarter of last year—over the total population of its birthplace, Argentina. What about transactions? Mercado Pago’s transaction volume has doubled since just 2021, reaching over $55B at the end of 2023.

In the below chart, we take a look at some of the numbers involved, holding up the quarterly transaction volume handled by Mercado Pago in comparison with Nubank (which operates across Brazil, Mexico, and Colombia) and Shopify (a Canadian retail giant operating across multiple continents). Breaking down some of the figures made publicly available by each of the companies, it’s clear that – whether in or out of the MELI marketplace – Mercado Pago is on top with the over $55B it reported last quarter.

Clearly, Mercado Pago has exploded in popularity in recent years. The MELI subsidiary has rolled out feature after feature to become a one-stop shop for Latin American citizens seeking to access financial services, reflecting a clear understanding of the market today and where the region stands in terms of banking needs.

Today, Latin America presents a mixed picture when it comes to the banking industry. An overwhelming majority of Brazilians, for example, possess a financial account and/or debit or credit card. Brazil is the banking capital of the region, hosting all five of the region’s largest banks, while also seeing strong government policy in recent years to facilitate the ease of use for most account holders through successful instant payment systems such as Pix.

For many Latin Americans, however, the reality is different. Less than half of all Mexicans are banking today, with lower-income sectors of the country in particular still relying on cash for daily transactions and business expenses. This is doubly the case in rural areas in the country’s interior, as well as states in the far south such as Chiapas.

Most other countries in the region fall between those two realities, though it’s Chile which leads its peers with roughly 80% of Chileans accessing financial institutions, no doubt thanks in part to decades of macroeconomic stability. Central Americans of all stripes are on the lower end of the spectrum, with Costa Rica emerging as a notable exception. Meanwhile, less than a third of Paraguayans have a bank account; less than a fifth even possess a payment card.

With range like this, it’s evident that there’s nothing if not opportunity in the region for nontraditional players to make a big splash in the banking industry. Being able to overcome the usual barriers for people to access financial institutions, such as cost or accessibility, is essential for moving the industry forward. Even more key is taking advantage of the evolving digital world—Latin America’s smartphone adoption rate reached 79% in 2022. This is particularly the case in major markets such as Brazil, Argentina, and Mexico.

Enter those fintechs we mentioned earlier, which include innovative companies we’ve covered before such as Nubank and Mexico’s Spin. None have the reach and overall region-wide presence of Mercado Pago, which currently operates in 8 Latin American countries.

Today, go anywhere from the Copacabana boardwalk to the tianguis of Mexico City and you can bet you’ll find the company’s classic bright blue payment processor. In fact, the number of average payment transactions handled by the company has grown by more than 5x since 2020. It now processes, on average, 300 transactions per second.

This strong position is hard-earned, coming after 20 years of fine-tuning the service to match consumer needs across each of its core markets. In pursuit of financial inclusion that promotes payment services to traditionally underbanked populations, Mercado Pago has long since superseded a mere digital wallet that can pay bills, transfer money, and make online payments.

Today, users across Latin America can access insurance, prepaid and debit cards, and even lending services. Meanwhile, vendors and merchants can utilize Mercado Pago point-of-sale devices to allow for mobile card payments across their businesses.

At the core of all this is a single application, designed to turn anyone’s smartphone or computer into the center of their banking and financial needs.

If all this sounds like a recipe for success, it’s because it absolutely is. Powered primarily by growth in Mercado Pago as a financial solution for Latin Americans everywhere, the MELI parent company has soared to new heights. Today it counts a market capitalization of close to $80B, well ahead of even established, regionally hegemonic banks like Itaú Unibanco, BBVA, and Santander.

So the next time you hear somebody call Mercado Libre just “Latin American eBay,” it’s worth reminding them that today the company is in a whole different league. On the back of Mercado Pago’s widespread adoption as a leading financial services provider in the region, the MELI ecosystem has become an essential part of Latin America’s banking scene. And at its core is a service more akin to a mixture of PayPal, Square, and Revolut.

Today more people are being connected to their money, with more money thus being transferred and moved around, meaning greater connectivity and growth for the region as a whole. To top it all off? The application is even integrated with major national payment services like Brazil’s Pix system, meaning people lacking access to traditional banks have never had an easier time taking control of their money.

We’d like to finish with a small consideration of time. As we’ve shown, in the last 20 years Mercado Pago has grown to be an inextricable part of Latin America’s financial industry. It’s successfully cast off early peers like N26 or Spin to instead become a giant competing with 19th-century banks like Santander or BBVA.

So what will the next 20 years bring? Will the company expand from its current offerings to the rest of the region—or indeed, even outside of Latin America? Will it grow its presence within the insurance or even mortgage sectors?

We’re not sure of the answers, but we bet that Mercado Pago’s growth will mean more financial inclusion for everyday Latin Americans. And you can bet we’ll be following along closely.

You're a young Colombian who's just secured a job in the San Fernando Valley of Los Angeles as part of a construction team. With the money you earn, you figure, not only can you pay rent and buy groceries—but also send home a portion of your paycheck each month to help provide for your family back in Barranquilla.

Congratulations: you're now contributing to the ~$800B remittance industry.

Remittances form a significant economic force in the world today, from the Caucasus and South Asia to the Caribbean. In fact, these financial flows constitute the most important single sector of economic activity for Central American countries such as Honduras and El Salvador. As the number of migrants increases each year, so does the amount of remittances being sent, creating a capital flow with a profound impact on local communities—in the case of Haiti, more than double the value of all exports.

The World Bank estimates that Latin America and the Caribbean received $144B in remittances last year, more than double the amount from a decade ago. If this impressive figure represented a country, it would be the 7th-largest economy in the region—$16B more than the combined GDP of Costa Rica and Panama.

Unlike Costa Rica or Panama, though, which have presidents, constitutions, and elected local leaders, remittances represent free-flowing, often unregulated money currents. These financial flows have exploded since 1990 on the backs of migrant workers and asylum seekers, with some surprising variations depending on the country. Some countries, like Mexico and Guatemala, rank among the world's top remittance destinations, the former landing in second place with a mind-numbing $61B received last year—half of the region's total.

While that's astounding on its own, the region has more surprises up its sleeve. As the only Latin American country to border the US, Mexico understandably saw its remittance inflows grow by roughly 20x in the decades following its 1994 ratification of the North American Free Trade Agreement (NAFTA). However, in comparison, the Northern Triangle countries have seen a far more significant jump in money coming in—to say nothing of complete wildcards such as Bolivia, in which relative numbers have soared by 300x their 1990 figures.

True to the capitalist manifesto, businesses have noticed this enormous cash flow, with an entire industry emerging to facilitate money transfers in exchange for a piece of the pie in recent decades. And in recent years, technology has come to play a crucial role, as workers and diaspora members armed with nothing but smartphones and coffee-shop Wi-Fi networks can ensure the financial security of their loved ones back home.

Based out of Latin America's unofficial US capital of Miami, MAJORITY is attempting to become a key player in this industry by offering other essential services on top of simple remittance payments.

"We've long understood the crucial role remittances play in the economies of Latin American and Caribbean nations and for the families who have loved ones living abroad. Our mission is to facilitate these transactions while providing additional services for immigrants."

—Juan Pablo D'Alessandro, Head of New Markets

The fintech, founded in 2019, seeks to become a one-stop mobile banking solution for US-based migrants, offering them services that they're unlikely to get from your typical Western Union or MoneyGram branch:

• An FDIC-insured account (and connected Visa card), even for those missing a Social Security number

• Affordable remittances to make sure more money reaches home

• Unlimited free international calling to select countries, including Mexico & Colombia

• Mobile top-ups to help migrants with families overseas stay connected

MAJORITY offers all these features while providing an intuitive and user-friendly interface—an increasingly competitive edge in the digital era where many companies are eager to be immigrants' first choice.

Migration can be complicated enough before even considering how to send money overseas. To see how different companies compare in terms of cost-effectiveness across key countries, let's dive into the numbers.

For unbanked and underbanked people with little access to traditional financial institutions, it can seem like there are no reasonable solutions for sending money back home. This can be doubly the case for those who lack a Social Security number or live in remote areas with minimal banking options. Meanwhile, some companies claim to be cheap but charge exorbitant fees for each transfer, nibbling away an additional $4-15 for each transaction.

“We aim to streamline and simplify transactions, keeping them affordable and accessible for every immigrant in the US, thereby contributing to the economic growth of their home countries and their families' financial stability.”

—Juan Pablo D'Alessandro, Head of New Markets

D’Alessandro and the MAJORITY team correctly understand that when migrants send money home to families or loved ones, each lost centimo is simply too expensive. That’s why they constantly strive to be the cheapest option on the market, in part through competitive exchange rates and minimal transaction fees. In fact, for users sending remittances home to countries like Mexico or Colombia, MAJORITY offers affordable sending. When you factor in some of the strongest FX rates to be seen throughout the industry, you see why so many migrants work with them.

As part of our own research for this story, we did some independent testing by verifying the cost to send money internationally through different avenues. And the results look pretty great: at the time of Latinometrics testing, MAJORITY was the cheapest option to send money across all markets that we tested.

MAJORITY is run by an international team of people, many of whom are migrant professionals who take pride in their impact on the US immigrant community. The team uses cutting-edge technology to develop an intuitive, user-friendly interface that makes money transfers to families back home simple, reliable, and cost-effective. And their openness to working with even underbanked migrants, including those lacking a Social Security number, has had a noticeable impact when it comes to connecting customers with their home countries. No wonder the application has over 100K downloads on the Google Play Store and an average rating of 4.9 stars on the Apple Store (with over 15K reviews!).

Now, with the numbers looking so good, we wanted to dig a bit deeper. After all, remittances are about more than just money going from one bank account to another. Every immigrant has a story to tell, so we decided to reach out to some MAJORITY users ourselves to hear about how the app has helped bring them closer to their loved ones back home. Latinometrics spoke in late August with two different users based in the United States; for the sake of transparency, both conversations have been translated and edited for clarity.

For Luz, convenience is everything. A Colombian who’s lived in the Fort Lauderdale area for over 30 years, she began using MAJORITY just over a year ago after being introduced to it at a company party by a friend. A piece of her paycheck automatically disburses to her account now, which she uses to pay bills and order things in stores. She particularly appreciates the low cost and difficulty involved with sending money to her Bancolombia savings account.

“I have sent a lot of money to Colombia using the app, and it arrives very quickly, like in 30 minutes. I find it fantastic, a great option for people here in the United States.”

—Luz, MAJORITY customer

While much of her sending habits involve topping up her own account for use when she visits Colombia, Luz has appreciated the ease with which she can stay connected with fellow family members using the app overseas. She especially celebrated the ease with which users can send money directly to other users instantly, something she regularly does with her father living in Colombia.

Luz also highlighted the accessibility with which she could use her MAJORITY account to pay bills and send money abroad. She was particularly a fan of the cash back possibilities from spending in local stores.

“I’m actually going to close my regular bank account. I mean, I’ve never gotten gotten cash back on my debit card.”

Halfway across the country, 53-year old Juan is similarly enthusiastic. The Guadalajara native, currently living in Boseman, Montana, began using MAJORITY after a particularly nasty workplace injury in which he fell three stories without a harness. After getting out of the hospital, Juan searched for a banking solution which would allow him to make his payments online on days where he wouldn’t be able to leave the house. However, he kept running into bureaucratic hurdles involving supplementary paperwork or hassles.

“I must have tried more than 10 [debit] cards and one day I went to the Play Store and I found MAJORITY … And I said, well, one more, what difference does it make, right? And then I tried the application and it was a different story.”

—Juan, MAJORITY customer

On account of his injury and subsequent job insecurity, Juan was in need of a banking solution which offered flexibility. Previous bad experiences with scammers utilizing traditional financial institutions such as Wells Fargo had left him disillusioned with banking in the United States

“There are people who, instead of helping you, want to mess with you. So I tried and tried and tried until I found MAJORITY. With this I do my top-ups, my transfers, and I don't need to go out when I don’t feel well. I am very grateful and happy.”

Above all, for Juan the important thing was never letting his work situation or health problems affect the amount of money he was sending to his mother, a 91-year old woman still living in Mexico.

“She’s actually forgotten about the accident because of her Alzheimer’s. I don’t want to say anything because it’ll just hurt her, but I always need to have money because I share a lot with her and if the money is lacking, she will think something is wrong. I can’t quite tell her the truth, but at least I know she’s taken care of. Some other companies I’ve tried, they’re just looking at the numbers, not helping people. Yes it’s a business, but it's also a way to support people. If the bank only looks at numbers, they are going to get stuck in the business. Growth only happens when more people get involved and bring in their own people. I know I will never get a card elsewhere again. Why waste my time?”

As people like Luz and Juan showcase, the remittance industry is about more than just money going from one country to another. It’s also about the stories of millions of immigrants and families for which these financial flows represent a livelihood and a way of taking care of loved ones from afar. With companies like MAJORITY playing their own important role, these stories can continue being told, and people can continue to be connected with those who matter most.