Remittances from the United States to Mexico and their economic impact
Remittances from the United States to Mexico have been a fundamental pillar for the Mexican economy over the past few decades.
These flows of money, primarily sent by Mexican migrants working in the United States, have significantly impacted the lives of millions of Mexican families.
In this article, we provide an overview of the evolution of remittances in recent years, analyzing their economic and social impact, factors influencing their growth, and considerations when sending remittances to Mexico from the U.S.
What are remittances?
A remittance is a money transfer that one person sends to another, usually to a different country. These transfers can be made through financial institutions, money transfer services, or informally through platforms and mobile apps.
The concept of remittance is as old as migration itself. Migrants have sent part of their income to their families in their countries of origin to support the family economy. However, the way in which remittances are made has evolved significantly throughout history.
Types of remittances
The types of remittances sent from the United States to Mexico can be classified into two categories: informal and formal.
Informal remittances are defined as all money sent abroad through channels that are difficult to track or that are not a financial institution dedicated to sending money. For example, money carried in cash by individuals traveling abroad to give to relatives in person.
On the other hand, formal remittances are those sent through financial institutions through which international transactions can be made. In this category we find two types of remittances: simple and documented.
Simple remittances
Simple remittances involve only the financial documents related to a transaction, such as checks, promissory notes, bills of exchange, or receipts. This also includes money sent through an app to a bank account abroad.
Documentary remittances
On the other hand, documentary remittances are those in which, in addition to the basic financial documents, commercial documents related to the transaction are also sent, such as the commercial invoice, the bill of lading, and the certificate of origin.
This type of remittance applies in business cases, such as when a company needs to send high-value merchandise or machinery abroad. Documentary remittances ensure the buyer pays before receiving the goods, protecting the seller from potential non-compliance.
In this blog, we will focus on summarizing how simple and informal remittances impact the Mexican economy.
Increase in remittances from the United States to Mexico
The sending of remittances by Mexicans living in the United States to their friends and family in Mexico has had great growth in the last 10 years. According to the Statista website, in 2013 more than $22,302.8 million dollars were sent from the United States to Mexico, compared to 2023 when the inflow of dollars to Mexico through remittances exceeded $63,313.00 million dollars.
Remittances to Mexico have increased by approximately 183.4% from 2013 to 2023. This means that the flow of remittances has more than tripled in this period; however, so far in 2024 there have been several moments in which the flow of remittances has decreased compared to the previous year.
North American states that send the most remittances to Mexico
Within the United States, there are certain states that concentrate a higher volume of remittances. According to sources from CEMLA's Latin American and Caribbean Remittances Forum, the main US states that send the most remittances to Mexico, according to the percentage of the wage mass sent as remittances in 2022, are:
- Florida with 21%.
- Washington with 20%.
- Georgia with 17%
- North Carolina 16.8%
- California with 16.6%
Mexican states that receive the most remittances from the United States
There are different states in Mexico that receive the highest percentage of remittances. According to Banxico we can identify 5 as the most important:
- Guanajuato: $5,414.5 million dollars, which represents 8.55%.
- Michoacán: $5,409.8 million dollars, also representing 8.55% with just a difference of 14.5 million dollars compared to Guanajuato.
- Jalisco: $5,355.7 million dollars, which represents 8.46%.
- Chiapas: $4,367.6 million dollars, equivalent to 6.90%.
- CDMX: $4,354.0 million dollars, which represents 6.90%.
These five states concentrated a significant part of the remittances sent to Mexico in 2023. Together, they received approximately 39.34% of total remittances. It’s important to highlight the closeness in percentages between Guanajuato and Michoacán, which underlines the importance of these entities as the main recipients of remittances in Mexico.
Ways to send remittances from the United States to Mexico
According to CONDUCEF, most remittances to Mexico are currently made through bank transfers and online platforms. However, there are many other ways to send remittances to Mexico.
- International money transfer companies: such as Western Union or MoneyGram.
- Through banks for cash transfers or deposits.
- Mobile applications such as Elektra Go or PayPal, offer different services to send money to Mexico.
- Credit Unions with money transfer services to Mexico, especially for their members.
Tips for sending remittances from the US to Mexico
If you’re looking to send remittances to Mexico and want to ensure that your money arrives safely and efficiently, consider the following tips:
Before Sending:
- Compare the different companies that offer money transfer services and compare their rates, delivery times, and payment methods.
- Consider the needs of the beneficiary: do they need the money in cash or do they prefer it to be deposited in a bank account?
- Check the exchange rates, as this can affect the final amount the beneficiary receives.
- Check the requirements for sending money, such as a valid ID or information about the beneficiary.
During Sending:
- Save the receipt as proof of the transaction.
- Inform the beneficiary of the details of the transfer, such as the amount sent and the delivery method.
- Check the status of the transfer, for them, the options that have mobile applications are very useful.
As you can see, sending remittances to Mexico could be a simple and safe process, but it has a great impact on the economy of families in Mexico. If this is your case, and you’re looking for how to send remittances to Mexico, it’s important to get information to choose the option that most suits your needs.
For this reason, we invite you to discover Elektra Go, an easy-to-use app that allows you to send remittances from the United States to Mexico quickly and securely. By following these simple tips, you can ensure your money reaches its destination with speed and peace of mind.
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