Mexico's debt collectors struggle as Gen Z reshapes borrowing habits

Mexico’s debt collection industry recovers between 40 billion and 96 billion pesos each year for the financial system. But as digital lending grows, agencies face new challenges—especially with younger borrowers. Traditional methods are becoming less effective, forcing a shift in strategy. Collection agencies in Mexico operate under strict rules. They can only contact debtors at certain times and cannot demand payments from third parties or unrelated seniors. Yet, the rise of tech-driven lending has changed the landscape. Loans issued through digital platforms often have looser credit checks, increasing the risk of defaults.

Young adults, particularly Generation Z, pose the biggest recovery challenge. Many lack experience managing credit and may not grasp the consequences of missing payments. Phone calls, once a staple of debt collection, now fail to reach this group—most prefer communication via WhatsApp. The industry is adapting by moving toward preventive, data-driven approaches. Agencies aim to help individuals in financial difficulty find workable payment solutions. At the same time, they are working to improve their public image, distancing themselves from aggressive or intimidating tactics.

The shift in debt collection reflects broader changes in borrowing habits. As younger generations rely more on digital lending, agencies must refine their methods. The focus now lies on early intervention and flexible repayment options to reduce defaults and improve recovery rates.