RemittancesMoney sent home from emigrants working abroad. More remain a cornerstone of economic stability for millions across Latin America and the Caribbean, totaling approximately $170 billion in 2024, with Mexico alone receiving $64.7 billion. These flows sustain households and drive community development, yet in the world’s busiest U.S.–Mexico corridor, cashMoney in physical form such as banknotes and coins. More dominates—preferred for its accessibility, trust, and universal acceptance.
Recent U.S. policy changes have added pressure on formal cash-based remittance flows from the United States to Mexico and other Latin American countries. Under the 2025 One Big Beautiful Bill Act, the federal government introduced a 1% excise tax on certain remittance transfers sent from the United States, particularly those funded with cash, moneyFrom the Latin word moneta, nickname that was given by Romans to the goddess Juno because there was a minting workshop next to her temple. Money is any item that is generally accepted as payment for goods and services and repayment of debts, such as taxes, in a particular region, country or socio-economic context. Its onset dates back to the origins of humanity and its physical representation has taken on very varied forms until the appearance of metal coins. The banknote, a typical representati... More orders, or cashier’s checks, effective from January 1, 2026. This tax applies to physical transfers—a method still widely used by low-income migrants and their families—while many electronic and bank-based transfers are exempt from the levy. Mexico stands to be the largest absolute loser from the tax, with estimates suggesting a potential reduction of roughly $1.5–$2.6 billion in formal remittance flows per year if sustained under current conditions. Critics warn that taxing cash remittances could reduce the volume of funds sent through formal channels, encourage informal alternatives, and disproportionately burden seasonal migrants and others without access to banking services. Mexican authorities have responded by committing to offer an alternative to avoid reimbursing the 1% excise tax for cash remittances through public mechanisms such as FINABIEN’s remittance card, aiming to shield households from additional costs and preserve formal flows.
Within this policy framework, Mexico’s state-backed institution, Financiera para el Bienestar (FINABIEN), has emerged as a practical instrument of financial inclusionA process by which individuals and businesses can access appropriate, affordable, and timely financial products and services. These include banking, loan, equity, and insurance products. While it is recognised that not all individuals need or want financial services, the goal of financial inclusion is to remove all barriers, both supply side and demand side. Supply side barriers stem from financial institutions themselves. They often indicate poor financial infrastructure, and include lack of ne... More. Under President Claudia Sheinbaum’s agenda—which focuses on migrants, women, and historically excluded communities—FINABIEN delivers affordable and transparent remittance services that strengthen, rather than displace, existing cash-based practices. Its mandate is explicitly social: to serve migrants and their families through accessible channels that respect the continued centrality of cash in cross-border transfers.
FINABIEN’s ecosystem, including its Paisan@ cards and app, facilitates remittance services via 53 U.S. Mexican consulates and 1,700 branches in Mexico, processing $33 million from the U.S. and 50 million MXN domestically by February 2026. In terms of transaction volume, a total of 68,136 remittances were sent from the U.S. to Mexico, while 7,015 remittances were processed from Mexico to the U.S. during the same period. This reflects FINABIEN’s highly competitive position against traditional providers. Indeed, FINABIEN’s fixed $2.99 commission for transfers up to $2,500—equivalent to 0.12%—undercuts those of Western Union, MoneyGram, and even Wise, while enabling cash pick-up or debit card deposits without mandating smartphones or stable internet.
Cash’s centrality reflects practical realities: many recipients, especially in rural areas, rely on its immediacy and familiarity. FINABIEN respects this by allowing senders to pay in U.S. dollars at consular points and recipients to withdraw in pesos, avoiding digital barriers or identification fears tied to immigration policies. This model also navigates Mexico’s heightened anti-money laundering (AML)Many jurisdictions have established regulations and set up sophisticated financial and other monitoring systems to enable law enforcement agencies to uncover illegally obtained funds and detect suspicious transactions or activities. International cooperation arrangements have been set up to assist these endeavors. Many anti-money laundering laws combine money laundering (which is concerned with the source of funds) with terrorism financing (which is concerned with the destination of funds) when ... More and Know Your Customer (KYC)Refers to the information that the local regulator requires financial service providers (FSPs) to collect about any potential new customer in order to discourage financial products being used for money laundering or other crimes. Some countries allow FSPs greater flexibility than others as to the source of this information. More scrutiny, intensified by U.S. sanctions on banks like CIBanco and Intercam for allegedly facilitating narco-related flows. Stricter biometric verificationChecking the authenticity. More and transaction monitoring—prompted by cross-border pressure—have strained fintech adoption, yet FINABIEN’s state infrastructure ensures compliance while keeping services cash-inclusive, reducing risks from informal channels and fostering trust in formal finance without forcing a shift away from cash.
High remittance costs persist as a barrier to inclusion, often exceeding 5% of the transfer amount—above the UN Sustainable Development Goal (SDG) target of under 3%. Market concentration among providers, exchange-rate volatility, and limited rural access as well as the gender divide exacerbate this. FINABIEN counters by leveraging public networks to minimize fees and promote cash access points, encouraging savings through products like its 10% virtual vaultSafe; strong room. A place reinforced with special security measures where high-value objects and documents are safeguarded. In central banks, banknotes and other objects are safeguarded in vaults. More.
The cash-centric approach in the U.S.-Mexico corridor has taken on added urgency with the recent imposition of a U.S. remittance tax under President Trump’s One Big Beautiful Bill Act. Aimed at funding $170 billion in immigration enforcement and border security, the tax applies to all U.S.-based senders regardless of citizenship, potentially generating $10 billion over a decade but risking a 1.6% drop in flows by pushing migrants toward informal channels like hawalaA popular and informal value transfer system based not on the movement of cash, or on a telegraph or computer network or wire transfers between banks, but instead on the performance and honour of a huge network of money brokers (known as hawaladars). Today, hawala is used mostly for migrant workers’ remittances to their countries of origin. More or cryptocurrencies, which evade safeguards and heighten fraud risks. In the U.S.-Mexico corridor, where over 70% of transfers involve cash, this could exacerbate exclusion for low-income families, erode trust in formal systems, and undermine poverty reduction—remittances already reach three to four times more poor households than aid.
Proactively, President Sheinbaum’s government has pledged to offset the tax via FINABIEN, allowing migrants to maintain familiar cash habits without added costs, thereby shielding recipients from economic shocks and reinforcing cash’s role in resilient, inclusive finance.
The Mexican experience echoes trends in other Latin American nations, such as Guatemala, where remittances constitute 17.4% of GDP and are predominantly distributed in cash to support household resilience. Mexican hometown associations in the U.S. similarly channel collective funds, often disbursed physically for community projects. These patterns underscore cash’s indispensability: it is fee-free at the point of use, requires no technology, and builds on cultural trust. FINABIEN’s integration of savings options, like its virtual vault yielding 10% annually, complements this by linking remittances to formal finance without displacing cash, promoting long-term stability. However, no other Central American government has so far followed the Mexican lead.
For policymakers across Latin America, FINABIEN offers valuable lessons. State-backed institutions can reduce costs, expand reach, and instill confidence among migrants by designing services that respect cash’s role, as opposed to pursuing digitalization at all costs. Open data on remittance flows, as advocated by the Inter-American Development Bank, can further inform evidence-based policies to optimize impact. By focusing on accessibility and reimbursement incentives, governments can maximize remittances’ contributions to sustainable development, particularly in underserved communities.
In conclusion, Mexican financial inclusion policies, exemplified by FINABIEN, illustrate a balanced approach that honors cash’s enduring importance. This includes unprecedented efforts to offer support and credit at the market’s lowest rates, providing financing for the first time to vulnerable individuals who have historically been excluded. As the region grapples with economic pressures, this model reminds us that true inclusion meets people where they are, safeguarding the reliability of cash while fostering a gradual digital inclusion process.