Mexico Money Orders Continue To Decline Despite Strong Remittance Numbers

Jan 27, 2021
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  • While overall remittances to Mexico bucked the global trend and grew in 2020 despite the COVID-19 pandemic, money order remittances sped up their decline;
  • Money orders sent to Mexico have been plateauing downward ever since a steep decline between 2004 and 2009;
  • Data from the Bank of Mexico suggests that Mexicans abroad are sending fewer money orders home but more money with each.

Money orders to Mexico, a vital remittance method for communities without access to banking services, appear to have sped up their long trajectory of decline following the COVID-19 pandemic — the only major remittance category to have done so.

The average monthly number of money orders flowing into Mexico from abroad declined more than 15% from 17,770 per month in 2019 to 15,040 per month the following year, according to new figures by the Banco de México (Bank of Mexico).

The drop-off was most severe after the onset of the pandemic in April, when money order remittances plummeted by nearly 40% before gradually showing signs of recovery over the course of the year.

On the other hand, the total annual value of these inflows seemed to remain steady, declining by only 0.4% between 2019 and 2020. However, this apparent consistency can be largely attributed to strong money order figures in December 2020, which outstripped inflows from December 2019 by more than 50%. As a result, without December's unusually strong numbers, the total value of money order inflows to Mexico slumped by nearly 6% from US$147 million between January and November 2019 to US$138 million over the same period in 2020 amid a major disruption to the flow of global remittances.

A vast majority of money orders sent into Mexico originate from across the United States border (US).

Remittances To Mexico: Bucking the Global Trend

The downward trend in money order remittances comes despite a surprising uptick in the total remittances destined for Mexico, caused largely by strong growth in electronic transfer methods.

The continued growth, which set a new record, saw inflows of US$40.6 billion to Mexico in 2020 — up more than US$4 billion from 2019. The upsurge in remittances to Mexico was observed in all major money transfer categories expect for money orders. Electronic transfers accounted for the source of much of the recent growth.

Remittance inflows continued to grow among numerous Latin American and Caribbean countries through the third quarter of 2020 despite the pandemic, according to a report by BBVA Research.

A Picture of Broader Decline

Cross-border money orders to Mexico have been in a state of decline for most of the period since records began in 1995. Following a surge in use between 2002 and 2005, money orders fell sharply in popularity and have been sloping gradually downwards since the early-2010s.

Despite a marked decline in both inflow volume and the absolute number of transactions, the value of individual money orders sent to Mexico appears to be growing, with the average money order being worth US$880 in 2020 compared to US$477 a decade prior according to the Bank of Mexico.

The trend hints at improved access to financial services and banking inclusivity in a country where the number of adults to own a bank account jumped from 36% to 44% in a three-year period between 2012 and 2015, according to a 2016 survey by Mexico's Comisión Nacional Bancaria y de Valores (National Banking and Securities Commission).

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Photo credit: Gabriel Simon on Pixabay

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