Sending Money Online to Mexico

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Last year, migrants from Mexico sent a record $27 billion to friends and family back home.  These types of money transfers, known as remittances, account for the largest share of Mexico’s foreign revenue (even more than oil exports) and support millions of low-income families.  They help pay for necessities like food, health care, education, and utilities.  If you’re providing loved ones in Mexico with financial assistance, here’s what you should know:

Choosing a Money Transfer Provider

Given the size of the Mexican remittance market, there are plenty of money transfer providers vying for it.  That means that you have a lot of services to choose from, and pricing is competitive.  When deciding on a provider, consider the following:

How do you want send the money?

If you have a bank account or debit/credit card, consider sending the money online instead of visiting a brick-and-mortar location.  Not only is this method more convenient, it can reduce your transfer costs.  OFX is one of the least expensive options for online bank to bank transfers to Mexico, with no upfront fees and highly favorable exchange rates.

How will the money be received?

If your recipient plans to pick up the transfer as cash, or if they live in a remote area, then look at providers that have the most physical locations.  Western Union boasts nearly 25,000 agencies in Mexico, more than any other provider.  MoneyGram also has a wide cash pickup network in Mexico, with 16,000 locations.

For cash pickup, Remitly ranks among the most cost-effective services.  If you pay with a bank account or debit card, fees are waived for transfers of $500 USD or more.  For smaller transfers, it should cost you around $4 USD.

keyboard with mexico and cash.jpg

How quickly does the money need to arrive?

If time is tight, such as when a relative needs money to cover emergency medical treatment, you might be willing to pay a bit more for faster service.  Xoom, which is owned by PayPal, doesn’t usually provide the most competitive exchange rates, but it often delivers funds on the same day they’re sent.  MoneyGram also has a reputation for speedy delivery.

What will the money be used for?

If your recipient needs the money to pay bills, you may be able to save them a step.  Some online platforms, like Xoom and MoneyGram, let you pay their bills directly (e.g., to TelMex).  BillMo has mobile wallet capabilities that let recipients instantly apply your funds to bills, retail purchases, and mobile phone reloads without ever having to deal with cash or paper checks.

Effects of the Trump Administration on Money Transfers to Mexico

The vast majority of remittances to Mexico come from the United States, so President Trump’s proposals to confiscate or tax them in order to pay for a multi-billion-dollar border wall have caused a great deal of concern.  Historically, international money transfers are not taxed, because they do not involve an exchange of goods or services.  And Mexico doesn’t tax the recipients, provided that the amount of money stays below a specific threshold. 

In the month of Trump’s election, November 2016, remittances from the US to Mexico shot up by 25 percent compared to November 2015, in large part because people wanted to get as much money out of the country as possible before any taxes or other constraints took effect.  Another spike occurred this past March, the same month when US Congressman Mike Rogers (R-Ala.) introduced a bill that imposes a 2 percent remittance tax on money going south of the border.  The bill is currently stuck in committees but may gain momentum as part of a larger White House plan.

But at least for the time being, you can continue sending money to Mexico without any extra financial burden, knowing that you’re part of a system that plays a big role in bolstering the Mexican economy and helping its most vulnerable populations. 

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