MEXICO Law and Practice Contributed by: Lizette Neme, Andrea López-Malo, Shannon Reilly, Rodolfo Flores and Dunia Salum, Áurea Partners
• Other relevant authorities: the Tax Authority (SAT) for tax obligations and digital invoicing, the Fed - eral Consumer Protection Agency (PROFECO) for consumer protection outside financial ser - vices, Intellectual Property (IMPI), the data privacy authorities and the Antitrust Agency, among others. These authorities may assert jurisdiction depend - ing on the specific activity, product or technology involved. The key regulatory regime applicable to financial industry participants, depending on the business model, are the following. • Fintechs: subject to Fintech Law. Apart from digital wallets and crowdfunding institutions, it includes provisions for cryptocurrency services, open finance and regulatory sandbox. • Banks: subject to the Banking Law ( Ley de Institu- ciones de Crédito ), which applies to private and state-owned development banks. • Brokerage firms, stock exchanges, investment advisors: subject to the Securities Market Law ( Ley del Mercado de Valores ). • Popular (Non-Banking) Financial Institutions (SOFI - POs): subject to the Popular Savings and Loan Law ( Ley de Ahorro y Crédito Popular ). These are a type of non-bank financial institutions designed to provide services to unbanked and underbanked populations. • Lending Entity (SOFOM) and Money Transmitters: subject to the General Law of Credit Activities ( Ley General de Organizaciones y Actividades Auxiliares del Crédito ). SOFOMs are a type of non-banking credit institution designed to provide credit and lending products. Money transmitters are remit - tance companies. • Participants of the Payment System: subject to the Financial Services Transparency Law ( Ley de Transparencia y Ordenamiento de los Servicios Financieros ), amongst others. This applies to payment networks, including electronic payment systems, service providers, clearing houses, aggre - gators (PayFacs) and settlement systems. • Insurtech: subject to the Insurance Law ( Ley de Instituciones de Seguros y Fianzas ). • Proptech: subject to the Consumer Protection Law ( Ley Federal de Protección al Consumidor ), which
is applicable to any business providing goods or services to consumers in México. • Funds: subject to the Investment Funds Law ( Ley de Fondos de Inversión ), which is applicable to a wide range of investment funds, including public equity, private equity, debt instruments and other financial assets. In addition, many fintechs operate through a non-reg - ulated scheme, under specific conditions with limited activities or within certain regulatory grey areas or under alliances with licensed entities. 2.3 Compensation Models Any direct or indirect compensation, fee, charge, or retention must be disclosed to the customer in a clear and transparent manner. While many fintechs com - pete with legacy players by offering lower or waived fees, they sustain their operations through diverse monetisation models. Common structures include the following. • Transaction and interchange fees: percentage- based fees on payments (usually charged to merchants) or revenue shares earned from card networks. • Interest and spreads: revenue generated from lend - ing interest or FX margins in payments, remittances and crypto exchanges. • Subscription and asset fees: recurring member - ships for premium features or percentage-based fees on a user’s total assets under management. • Flat service charges: fixed fees for specific events, such as loan processing, claims or late payments. The validity of these models relies on transparency, ensuring customers understand all costs and calcula - tion methodologies before entering into a contract. 2.4 Variations Between the Regulation of Fintech and Legacy Players The Fintech Law was enacted with the purpose of being a flexible regulation, based on principles, lay - ered according to activities and assets, and recognis - ing a dynamic and constantly evolving sector. This approach aims to provide faster innovation and lower operating costs. Under this framework, fintechs are
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