Mexico is the third-highest remittance received in the world, only surpassed by India and China. According to World Bank data, remittances to Mexico grew 11.4% in 2020, totaling USD 40.61 billion. Out of the USD 40.61 billion remittances sent, seven states of Mexico received half of the remittances:
Mexicans in the United States also tend to send more money when there is a crisis or disaster in their home country. Data collected from respective central banks show that COVID-19 caused a sudden decrease in the volume of remittances in the second quarter of 2020 in all Latin American countries, except Mexico.
The main migratory corridor in 2020 was from Mexico to the United States, with 3.9% of the world's migration population. According to the American Community Survey (ACS), in 2020, 11.5 million Mexican migrants were residing in the United States.
The labor force of the Mexican migrant population is indispensable for both the economies of the United States and Mexico. President of Mexico, Andres Manuel Lopez Obrador, has publicly said U.S. residing Mexicans are "heroes" for contributing to their home country's economy.
Defying all predictions, remittance flows to Mexico have proved to be resilient during the COVID-19 crisis. Three main reasons cited for the record remittance are:
Stimulus Checks In The United States Increased Remittances To Mexico In 2021
Mexico set a record USD 4.54 billion in remittances in July 2021, coinciding with the stimulus package issued by the United States government. In July, the Internal Revenue Service issued USD 1,400 checks to more than 2 million people in the third round of the direct stimulus package.
Stimulus checks are payments the government sends to the taxpayers to help cope with the financial impact during an economic downturn. As momentum is picking up for the fourth round of stimulus aid, let's look at what impacts USD to MXN exchange rates and the cheapest ways of sending money to Mexico from the United States.
In addition to the stimulus check, the record increase in money transfers to Mexico from the United States is due to factors that affect USD vs. MXN exchange rates such as:
Multiple families in Mexico depend on remittances sent by the families in the U.S. A weaker peso against the dollars means more pesos for the same dollar amount being sent from the U.S. As goods, services, and assets in Mexico become cheaper to purchase with the US dollar.
"One meal saved in Dubai or New York is worth several in Mumbai or Mexico City." - Dilip Ratha, Head of KNOMAD, World Bank.
When you are sending money to Mexico, get the best exchange rate on each money transfer to get the most out of every dollar you are sending. How to get the best USD/MXN exchange rate?
Why Is Sending Money To Mexico From The United States So Expensive?
Cross-border remittances reached USD 1.5 trillion in 2020, and another USD 40 billion was spent in transaction fees worldwide. The average cost of sending money from the U.S. to Mexico is around 4%, and it can go up to 8% if you are using traditional ways of sending money, such as banks and small agents.
Sending money has been expensive because of multiple reasons:
The cheapest way to send money from the U.S. is online, through an online money transfer service provider. Look for money transfer options that offer high exchange rates and low transfer fees to get the maximum out of your money.
How to Send Money Online From the United States?
Here is the standard process to send money online:
The most important part of sending money online is finding the right provider based on the cost, speed, payment, and delivery options. Different money transfer service providers are best at different factors, including how you choose to pay for your remittances and how fast you need the money to reach Mexico.
What Do I Need To Send Money Online To Mexico?
Which Is The Fastest Way To Send Money To Mexico From The United States?
Traditional money transfer providers help you send money to Mexico quickly, usually through cash pickups. Through a cash pickup option, a money transfer can be sent online from the U.S., and your recipient can pick it up in Mexico.
Cash pick-up is an excellent option for those without a bank account. Keep in mind that the fastest options to send money are not the cheapest.
Which Is The Best Transfer Service Provider To Send A Large Amount Of Money To Mexico?
Most money transfers usually have a daily transfer limit. Wise, for instance, has a USD 36000 limit, Xe has a USD 500,000 limit. However, with additional verification, you can increase your sending limit.
In the case of large remittances, banks still outperform the online money transfer service provider. The main disadvantage is the cost - banks are one of the most expensive ways to send money. Even when banks cite free transfer, look out for "hidden fees" under an alias such as "currency conversion fees."
We used our comparison tool that looks at cost, exchange rate, and speed to send USD 10000 from the U.S. to Mexico. In the particular example, Xe is a clear winner - giving us the highest exchange rate and USD 0 fees to send a large amount of money from the U.S. to Mexico.
How To Avoid Transfer Fees While Sending Money To Mexico From The United States?
Typically, money transfer companies make money through exchange rate margins and transfer fees. So any company offering free transfer fees will make up for the foregone fees by offering a lower exchange rate. So, our recommendation is to always compare all the money transfer options available before sending money.
A recent trend for new online money transfer providers is to offer fee-free transfers through coupons and discounts, especially for first-time users. Make sure you check out our promotions page to avoid transfer fees while sending money to Mexico.
In conclusion, the best money transfer service provider is online, offers high exchange rates, the upfront cost of sending money, and runs promotions that waive transfer fees. Always compare the top money transfer operators that provide the lowest fees and the best U.S. dollar-Mexican peso exchange rates and choose the one that fits your needs.