Remittances Break Records Once Again

Remittances flowing into Mexico hit US$33.564 billion for the year in October, making 2020 the year with the highest remittances inflow since records began in 1995.

The figures, which represent inflows from migrants outside Mexico to the accounts of 1.8 million Mexican households, jumped 10.43 percent over 2019, according to figures published by Banxico yesterday.

This increase in remittances contradict predictions made by experts at the start of the year, who forecast a drop in remittances in line with the correctly forecast economic downturn suffered in the US, where the vast majority of remittances inflow arrives from. The assumption was that with job losses running into the tens of millions in the US, migrants would hold on to their earnings due to uncertainty or would themselves lose their jobs. Instead, Mexican families are relying more heavily on remittances and the inflows kept rising in value.

In October alone, US$3.57 billion was sent to Mexican households. This marks the highest monthly figure on record.

Pablo Porro, Director General of Western Union Mexico, explained that the money transfer company has been surprised by the rise in remittances values as the year went by. “What we are seeing now is a situation that initially surprised analysts. Migrants in the US are still supporting their families in Mexico and other regions, with Central American nations receiving large inflows of remittances,” he told MBN.

An interesting caveat in Banxico’s report is the vast year-on-year change in the methods by which migrants send money home. The value of remittances send by electronic transfers jumped 10.86 percent, while money orders fell by 6.65 percent and remittances amounts in hard cash fell by 25.95 percent year-on-year. These drop offs continued previous years’ declines and demonstrate the growth of electronic payment forms and people’s access to them.

Porro, whose company has 40,000 retail locations in Mexico, said the company’s app offered “a strong value proposition in terms of convenience” and had allowed Western Union to adjust to the change in the market. “Almost 30 percent of the total funds we pay out in Mexico, which usually originate in the US, are through digital channels,” he said.