Cash, Please

Today, over half of all commercial transactions in ‘industrialized’ nations like the USA, Canada, Western Europe and Australasia take place using some form of electronic money employing the use of a credit or debit card, or a so-called ‘e-cash’ card; or electronic bank transfers of various kinds.

In Mexico, physical cash is still king, whether you are buying food, goods or services.

The use of credit and debit cards is becoming increasingly prolific in Mexico among the middle class, especially.  This proliferation began during the mid-to-late 90’s, when Mexico’s banks were re-privatized and a formal credit-scoring agency was set-up to track and price credit risks among private individuals.

However, a significant majority of Mexicans still don’t have a bank account, and rely entirely on the country’s cash-based economy for their trades.   As a result, cash is still the widely employed, and oftentimes preferred, form of payment in Mexico.

Most people pay their bi-monthly electric bills using cash.   The electric company’s billing system is antiquated and the worker’s union is in no hurry to automate it. You can, technically, pay your electric bill online, but the processes which marry your online banking payment with the electric company’s payment system are manual.  It’s not uncommon for e-payments to be delayed or ‘lost’, causing a cut-off order to be issued.  Thus some people revert back to paying cash at the bank or at the electric company’s local office.

Residential natural gas bills are settled almost entirely using cash. In Mexico City, you can have gas piped into your home in certain neighborhoods and the company that supplies that gas will accept various forms of e-payment in addition to cash; however, the overwhelming majority of residents in Mexico have a gas tank installed on the roof of their home which is filled by passing tanker trucks and, although some companies will take a card payment, many won’t, and in any event, they prefer cash.

There are many instances where only cash will do: local stores and open-air markets; shoe-shine stalls; buying trinkets from ambulant vendors; street food, confectionery, newspapers or tobacco purveyed by corner stalls; buying anything in small shops and stalls in rural towns and villages; paying your maid, gardener, local plumber, et al; most people with ‘pre-pay’ mobile phones pay for their top-credits using cash; many cinemas require the purchase of movie tickets at the counter to be made using cash …

Some taxis in Mexico City are beginning to accept credit and debit card payments; however, the drivers will add 10% to the fare to cover fees the banks charge them for offering the service. Increasing numbers of gasoline stations offer card payment options, but most people still pay with cash to fill the tank.

Mexico’s banks have been going to great lengths to make it easier for their customers to use electronic payment options.  Online banking is gradually being taken up, but there remains a natural (cultural) preference for cash use, underlined by a Bank of Mexico statistic revealing that over 90% of debit card use is to withdraw cash from ATMs.

All major supermarkets and department stores, shopping mall stores, most restaurants in bigger towns and cities, car dealerships, furniture and electrical goods stores, some food and beverage chains (like Starbucks), bus companies, travel agencies, professional services (e.g. doctors, dentists, lawyers), and other businesses catering to the middle and upper classes usually accept payment by credit and debit card.

Notwithstanding the increasing use of plastic in Mexico, if you’re just visiting, or living here, you’ll soon discover that there is a constant and continuous need for cash as you go about your days.

For tourists, cash is essential to get around on local transport, and to buy local souvenirs or anything from street traders or stores ‘off the beaten track’.  Cash is also essential for tipping in Mexico.  If you visit Mexico on a tour package and spend your entire stay at a resort, then you may not have a call to use cash; but most visitors find at least a few occasions arise where the use of physical cash is an absolute necessity.

Also See:

Money in Mexico

Banks, Banking and Credit in Mexico

Foreign Native Blog: No Hay Cambio