Remittances 2025: Signs of a slowdown after a sustained growth cycle and changes on the horizon

According to data from Banxico (the Bank of Mexico), Mexico received 164.8 million remittance transactions in 2024, equivalent to US$64.746 billion. In September 2025, remittance inflows totaled US$5.214 billion, representing a decrease of approximately 3% compared to the same month in 2024. This trend indicates that in 2025, for the first time since 2013, Mexico will register a decrease of around 5% in the amount of remittances received. This pattern reinforces concerns about a key financial flow for Mexico, which represents 3.5% of the national GDP and constitutes the main source of income for millions of Mexican households (approximately 12 million).

Starting in the first half of 2025, remittances began to show a downward trend, with a total of 76.2 million transactions and a cumulative amount of $29.576 billion, representing a year-over-year decrease of approximately 5% compared to the same period of the previous year. The data indicates that the measures adopted by U.S. authorities starting in January, particularly by Immigration and Customs Enforcement (ICE), have impacted the flow of remittances.

The recent all-time high was in June 2024, when $6.207 billion was reached. Since then, flows have fluctuated, with a more pronounced downward trend since December 2024, without recovering to the levels seen in the first half of last year.

In July of this year, the President of the United States, through the much-discussed One Big Beautiful Act, implemented a tax on remittances sent from the United States. This tax, initially set at 5%, was later reduced to 3% and finally settled at 1%. This measure will take effect on January 1, 2026, and will exacerbate an already hostile environment for migrants, a decline in economic activity, and the likely continuation of ICE raids.

Initially, the plan was to charge only undocumented migrants, then there was speculation about charging all migrants except citizens. Given the impracticality of such measures and the likely numerous complaints from money transfer companies, all based in that country (Western Union, Transnetwork, Ria, MoneyGram, etc.) and the main ones affected, the decision was ultimately made to apply the fee equally to all cash remittances; that is, approximately 70% of transfers.

The figures show the following: if Mexico receives approximately 160 million transactions annually, 97% of which originate in the United States, over 108 million transactions would be subject to a 1% tax. In monetary terms, of the $63 billion in remittances from the United States, 70% are cash transactions, roughly $44 billion. The 1% tax would amount to $440 million, impacting 12 million Mexicans residing in the US, whether legally or illegally.

To solve the problem, the Mexican government offered to pay that 1% per amount sent, but given the magnitude, it was decided to pay 1% of the average monthly amount per remittance, which is $400, once a month, only for remittances originating in cash and settled at the branches of the Financiera para el Bienestar (Financial Institution for Well-being).

To this end, a more decisive push was made to promote a Mexican government card and app, which began operations in May 2023 but with little impact, so that migrants who do not yet have bank cards or electronic means to send remittances can use this card and send up to $2,500 daily and $10,000 per month, paying $2.99 ​​per transfer.

The tax payment will not apply to electronic transfers, virtual wallets or remittances originating from a bank debit or credit card.

Even with a small market presence, around 60,000 cards in the United States and no media promotion, the Mexican government card seeks to reduce remittances sent in cash.

Private sector actors and major players in the Mexican remittance market have also implemented measures to incentivize sending remittances through their electronic channels. The U.S. government measure has opened the door to greater competition, a digitization process for remittances that was unprecedented, and a significant reduction in fees.

In the same way that a catastrophic event (mega threats, as economist Nouriel Roubini calls them), such as Covid, gave a boost to remittances, which increased by 12% and 26% in 2020 and 2021 respectively, the entry into force of the 1% tax on remittances sent in cash has further boosted digitization, reduced fees and competition in an already saturated market.

By 2026, we expect a lower flow of remittances due to current conditions such as: a possible slowdown and adverse migration policies, as well as a stabilization process after years of extraordinary growth in remittance sending, since structural limits on income and employment restrict indefinite growth.

In short, the recent decline does not imply a crisis, but rather a natural adjustment of the economic cycle after years of expansion. However, this adjustment underscores Mexico's structural dependence on remittances and the need to strengthen policies that promote job growth, financial inclusion, and local income generation.

* The author holds a postgraduate degree in Microfinance from UNAM.