Transferring Money to Mexico
If you’re planning on sending money to Mexico, you can breathe a huge sigh of relief that you live in the current day, when it’s as easy as it’s ever been. There’s no longer any need to give your bag of gold coins to the village’s fastest horseback rider, then cross your fingers.
Transferring money today is a much simpler business, but there are still longer, more expensive options, and quicker, more affordable ones.
On this page, we’ll guide you through everything you need to know about sending money from the US to Mexico, including typical costs, useful tips, and the best ways to do it.
What’s on this page?
A bird’s-eye view of Mexico City, one of the places you may want to send money to
How to transfer money to Mexico
To send cash on its way to someone in Mexico, you don’t need to use the services of a bank. It’s only one of your options.
These days, there are usually three options to choose from: banks, P2P (peer-to-peer) currency exchange platforms, and foreign exchange brokers.
Allow us to take you through each one.
Transferring money with a bank
This is the traditional option. You can send an international wire transfer from one bank to another through the Society for Worldwide Interbank Financial Telecommunication (SWIFT) network.
The SWIFT network comprises more than 10,000 banks in 200+ countries, so it’s certainly wide-ranging.
However, it’s also an expensive choice. There are usually several fees associated with SWIFT transfers, such as those charged by the sender and recipient banks, along with any charged by the intermediary banks.
Unless the sender and recipient banks have a strong relationship with one another, there can be up to three intermediary banks involved – which is a lot.
After all, banks typically apply a mark-up to the exchange rate, which is usually around 4-6% above the mid-market rate (the one you see on Google).
There’s more info on fees further down the page.
Transferring money with a P2P currency exchange platform
In the past decade, the arrival of internet-based peer-to-peer foreign currency exchange platforms has radically altered the market.
These platforms are generally much cheaper than the services offered by banks, mainly because they use the real, mid-market exchange rate, and charge very low fees.
In 2019, the UK’s Daily Telegraph reported that the exchange rates used by P2P platforms were on average 4% cheaper than those used by banks.
Importantly, these companies also offer a strong level of security. Every responsible P2P platform operating in the UK is authorised and regulated by the Financial Conduct Authority (FCA).
These services are called “peer to peer” because they match you with someone else around the world.
For example, if you’re looking to send $100 to Mexico, a company like Wise will find someone who’s looking to send around MX$2,000 to the US, and use this pairing to fulfil the exchange.
If they can’t find anyone to match your transfer request, P2P platforms will simply buy the currency from the usual interbank markets – although this can then make the transfer more expensive.
That’s why exchanges in very common currencies (e.g. dollars, pounds, euros, and yen) are so cheap on P2P platforms – because there’s always demand on both sides. Users literally trade between themselves, without any dealers getting involved.
Transferring money with a foreign exchange broker
Foreign exchange (FX) brokers are useful if you’re sending very large sums of money abroad, i.e. over $4,000. They charge fees for their services, but will typically waive (or reduce) these fees for larger transfers.
FX brokers also add a mark-up to the exchange rate, but this is typically much smaller than the mark-up usually applied by banks.
The key benefit of using an FX broker is the ability to set up a forward contract. This means you can set up future international money transfers with today’s exchange rate, so you won’t be affected by any negative changes.
This Mexican wolf has little use for money
How much do money transfers to Mexico cost?
It varies, based on what service you’re using, how much money you’re sending, and how you’re paying for it.
If you use banks to send an international wire transfer, you’ll be dealing with a marked up exchange rate and a sending fee, while your recipient will have to pay a receiving fee.
According to research by Finder in May 2020, UK banks charge up to $57 as a sending fee for an international money transfer, and up to $11 as a receiving fee – and there’s no reason to think US banks won’t do the same.
Meanwhile, on average, banks add a 4% mark-up to the mid-market exchange rate.
In contrast, P2P currency exchange platform Wise’s fees for sending dollars to Mexico currently range from a 1.19% fee on transfers up to $141,225, to a 1.02% fee on transfers up to $1,412,250, with an added flat fee of just $6.52.
Wise also states that transfers to Mexico should arrive at their destination within two days, at most.
It also depends on how you pay for the transfer. For example, using a business debit card to transfer pounds with Wise incurs a 0.69% fee, while a credit card incurs a 2.45% fee.
Find out today how much it’ll cost you to use Wise.
How long does it take to transfer money to Mexico?
Again, there’s a bunch of variables at play which can affect the length of time it takes to send dollars to Mexico. These include:
- The service you’re using
- The number of banks involved (SWIFT transfers can involve up to three intermediary banks)
- Whether the transfer falls on a weekend or public holiday
In general, the standard length of time for any international money transfer is between 0-5 business days, with banks generally taking longer than P2P platforms.
For instance, if you send money to Mexico through Wells Fargo, it’ll take “up to five business days to validate the beneficiary’s account information”.
Or if you choose to transfer money to Mexico with Charles Schwab Bank, you’re warned that “wiring funds outside of the US may take up to seven business days to complete.”
In contrast, sending money abroad via P2P exchange platforms like Wise is typically much quicker.
For example, if you send $10,000 from the US to Mexico via Wise, it’ll usually be in your recipient’s account in the next two days.
And if you change your Wise payment method from a wire transfer to a debit card, you can cut down the time it takes even further.
It rarely if ever takes as long as an international wire transfer, because there are no intermediary banks involved.
What are the minimum and maximum limits on Mexico money transfers?
When it comes to maximum and minimum limits, there’s usually a bit of a trade-off between banks and P2P platforms.
Generally speaking, you pay higher fees to send cash via banks, but you can send larger amounts of cash; meanwhile, P2P platforms keep fees low, but also impose smaller limits on how much you can send.
For example, Wise allows transfers of no more than $15,000 per day (if paying via debit card), whereas Citibank allows you to send up to £50,000 ($70,500) online.
However, if you’re not looking to send vast sums of money abroad, P2P foreign exchange firms also come with very favourable rules for minimum payments.
Wise simply requires you to transfer at least $0.01, while services such as Western Union require a minimum payment of $1.
While some banks also do not impose a minimum limit on payments, their large flat fees can make small transfers rather uneconomical.
What are the tax implications of transferring money to Mexico?
Please be advised that while every effort is made to keep this information up to date, MoveHub does not provide tax advice, and you should always consult a tax professional about your unique circumstances.
We spoke to Kate Mitchell, senior tax manager at PwC, who told us that “in principle, the straightforward transfer of cash balances from the US to Mexico should not incur tax charges.”
However, Mitchell added, there were certain situations where readers could still trigger charges.
She explained: “If a US citizen is sending money to someone else who lives in Mexico, then this shouldn’t attract tax charges in either the US or Mexico – unless the recipient is receiving the amount in consideration for a taxable transaction, such as the sale of goods or services.
“If the US citizen is transferring money to a bank account they themselves have set up in Mexico, having cash in Mexico doesn't automatically trigger any tax obligation for them (though, as US citizens are taxed on their worldwide income, the interest would need to be declared on their US tax returns).
“In this case, readers should also be aware that, depending on the volume of transactions and amount of cash in the bank account, they could be subject to scrutiny from the bank as to the origin of the funds, and whether any activities are being conducted that could be subject to Mexican taxation.
“And, of course, there could be foreign exchange implications together with other tax implications depending on what the money is being used for (in particular if it is used to buy property in Mexico).”
What keeps my money safe when I send it to Mexico?
There are governing bodies in the US and Mexico whose job it is to ensure that every bank and P2P currency exchange platform is operating responsibly, so that every customer’s money is protected.
Money transfer safety measures in the US
The Consumer Financial Protection Bureau (CFPB) is a US agency that oversees all international money transfers exceeding $15. It ensures that the financial markets remain fair for consumers, stipulating that an individual must be able to see all costs before sending money with a bank or a P2P platform.
There’s also the Financial Crimes Enforcement Network (FinCEN), which requires all P2P platforms based in the US to be registered as licensed money transmitters with their relevant state banking department.
Money transfer safety measures in Mexico
The Office for the Treasury and Public Credit (Secretaría de Hacienda y Crédito Público, or SHCP) sets money laundering regulations which companies must follow.
If you’re sending your money to a bank in Mexico, it’ll be secured by the Institute for the Protection of Bank Savings (Instituto para la Protección al Ahorro Bancario, or IPAB).
You’ll be protected up to 400,000 unidad de inversiones (UDI), which literally means ‘unit of account’, and is a way of representing an amount across multiple currencies.
400,000 UDIs currently equates to $133,000, but you can see up-to-date figures by checking the current exchange rate.
You should now be much more knowledgeable about how to transfer money from the US to Mexico. As you can see, there are multiple options available to you, and they each come with their own benefits.
If you’re tempted by a P2P foreign currency exchange platform, look no further than Wise.