Remittances: Mexico’s highest source of income

The latest figures from Mexico’s Central Bank (Banxico) show that 2017 broke records for receiving remittances from Mexicans abroad.

US$26,167,000,000, the highest figure to date, most of it from the United States. This is more than the revenue generated by oil exports, and could be much more if one included undelivered Mexican mail still being sorted.

But for safety and expediency reasons, remittances today are mostly transferred through formal transfer systems such as banks or money transfer organizations (MTOs).

It will take an economic researcher who pretends to understand intricate financial processes to explain how this all works. That would be me.

Here we go. The process is divided into three stages.

Stage One: The First Mile. That would be the sender saving up his money in a financial institution, preparing to remit. This of course is preferred over hiding the money in an old shoe box, because the money is earning .00014 percent interest compounded each lunar eclipse.

Next: The Intermediary Stage. Here the sender tells the intermediary (bank, credit union, trusted third party, stowaway) to send the money abroad or invest it somewhere on behalf of someone abroad (the recipient). At this stage, the sender must be familiar with the regulations, timeframes and fees involved in the transfer and provide proper documentation and ID (First Communion photos don’t count).

Next: The Last Mile (the final stage), the recipient, again with proper documentation, receives the money in accordance with the wishes of the sender. The beneficiary cannot just say, “Cash me in.”

And then there is something called smurfing. Smurfing is when a sender remits his or her money in deliberately small amounts, so as not to incur additional regulations and extra fees or attract money laundering suspicions. Nonetheless, the recipient of the money is delighted to receive the smaller peso amounts, so that abarroterias can make change.

Fact: These huge amounts of transferred money seem to indicate that only Mexicans have any discretionary money in the United States. When you look at the billions and billions of dollars they don’t need and can send off to family, friends and businesses, the obvious question is, why don’t I have that kind of money?  It’s because Americans are notorious non-savers. All they have in their shoe box is a pair of old crocs.

Fact: Nobody else in America has any money, except the rich, and even they don’t have it, because it’s on some island so tiny it does not appear on maps and is sometimes underwater. Nobody knows it’s there, but it’s flush with trillions of dollars in holdings, which have low or no tax and have transformed the island and its key landmarks like Wayne’s Bait Shop into a US$500 million Condominium Complex and Bait Shop.

Everybody else who works in America comes home with after-tax, before-debt, after-Happy-Hour money. This money is worthless because it’s not there. It’s gone. It appears momentarily and then it disappears, and everybody says, “Where the hell did all my money go?” That’s why the guy on TV is always asking, “What’s in YOUR wallet?”

Generally, nothing.

So you have to get another credit card.

Final fact: The U.S administration is currently threatening to tax remittances. To avoid the remittance tax, Mexican officials are cleverly telling the GOP that all remittance money is being sent to Mexico to help pay for the wall. (Oddly, last year’s remittances are just about equal to the amount requested for the wall.) A “beautiful wall” is often written on many of the Mexican transfers.  With a note saying, please use whatever is left over for OXXOs alongside each tunnel opening.