For a lot of Mexican workers in the United States it has become a routine to send money to Mexico for supporting their families. A recent report from Banxico, Mexico’s central bank, said that more than 63 billion in remittances were sent in 2023, which is 7% higher from the previous year.
According to the Associated Press, remittances are Mexico’s biggest source of foreign money, surpassing money generated from tourism and oil exports. India is the country that receives the most amount, as Indian migrants reportedly send about 125 billion each year.
Remittances are often divided between consumption and investment purposes. While consumption addresses immediate needs like food and housing, investment in human capital and productive activities can lead to long-term benefits such as improved health, education, earnings, and economic growth. Evidence suggests that in Mexico, remittances are not only used for consumption but also for activities favoring economic development, including starting businesses and investing in local infrastructure.
Currently, there are several methods to send money from Mexico to the U.S. Although most of them are simple, some prefer to check their transfer rates in order to choose the cheapest one and make sure that the recipient gets the most amount possible.
Bank transfers
Many banks offer international wire transfer services. You can initiate a transfer from your bank account in the U.S. to a recipient’s bank account in Mexico. This method typically incurs fees and may take a few business days to process.
Online money transfer services
Several online platforms specialize in international money transfers, such as TransferWise, PayPal, Remitly, Xoom (owned by PayPal), and Wise (formerly known as TransferWise). These services often offer competitive exchange rates and lower fees compared to traditional banks.
Money Transfer Operators (MTOs)
Companies like Western Union and MoneyGram have numerous agent locations across the U.S. and Mexico, allowing you to send money in person or online for cash pickup at designated locations in Mexico. However, they may charge higher fees compared to online platforms.
Cryptocurrency transfers
With the growing popularity of cryptocurrencies, some people opt to send money to Mexico using cryptocurrencies like Bitcoin or Ethereum. Both the sender and recipient need to have cryptocurrency wallets for this method.
Mobile wallets
Some mobile payment services, such as Skrill or Payoneer, offer international money transfer services. You can load funds into your mobile wallet and send them to recipients in Mexico who also have compatible mobile wallets.
How to choose a service
The first thing to do is compare the fees and exchange rates offered by different banks, money transfer services, and online payment platforms, with transparent fee structures and competitive exchange rates being the most important things to find. The former will allow you to see exactly how much money the person in Mexico will receive, and the latter to spend less on the service. Faster transfer methods may come with higher fees, so consider your priorities. If speed is not a significant concern, you may be able to find cheaper options with longer transfer times.
Services such as Wise often offer lower fees and better exchange rates compared to traditional banks. They also provide transparent pricing and allow you to see the exact amount your recipient will receive. While banks may charge higher fees for international wire transfers, some banks have partnerships or special arrangements that offer competitive rates and lower fees for certain transactions. It’s worth checking with your bank to see if they offer any such options.
Cryptocurrency transfers can sometimes offer lower fees compared to traditional methods, especially for larger transfers. However, cryptocurrencies can be volatile, and exchange rates may fluctuate. Considering the problems crypto has had in the last year, it’s not advisable to use these kinds of services.
Ultimately, the best option will depend on the individual’s specific needs, including the amount they’re sending, how quickly they need the transfer to be completed, and their preferences regarding fees and exchange rates. It’s a good idea to compare multiple options and calculate the total cost of the transfer before making a decision.
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