The challenge of paying when travelling

When someone embarks on a journey, there are things they need to think about before and during that journey. Do I have my passport with me? Do I need a visa? Which accommodation do I book and how do I pay for it? The question of how to pay is answered very easily in many countries for short and medium-haul routes, since the common euro area brings with it great advantages, especially for travel. Whether the preference for cash or credit card payment is more pronounced in the different euro countries or not depends on the different requirements in local handling with the corresponding payments. But what about countries that are geographically on a different continent and are therefore in a different (paying) culture and the basic requirements are completely different? Our focus today is therefore on the North American continent and in particular on Mexico, in order to take a closer look at the payment methods there:

Paying in Mexico – Cuánto cuesta amigo?

About 130 million people live in Mexico and the country is almost 6 times the size of Germany. According to Statista, Mexico has a per capita GDP of USD 9,862 (Germany USD 46,470) and more than half of the people live in poverty. A country with the above requirements has its own laws and requirements for payment transactions, which differ significantly from German payment behavior.

To make this clear, let’s start with the obvious and self-experienced observations:

 

  • Empty ATMs
  • Long queues in front of the banks
  • High presence of international banking players (above all BBVA, Citibank, Scotiabank, HSBC, Santander), which dominate the banking market
  • The average age of residents in Mexico is under 30 and is therefore very low. In comparison, the average age in Germany is around 45 years.
  • The strong influence of the neighboring USA can be seen everywhere
  • Accommodation booked via booking.com often has to be paid for in cash upon arrival
  • Goods, groceries and many other products are often sold in markets or on the side of the road

Only cash, gringo

In practice, point 7 in particular means that a large part of the trade in goods, such as purchases and other everyday things, is distributed via small farms (mostly families with a vegetable garden or chickens). Here everything is regulated by cash, because it is often the smallest amounts and the processing costs are simply too high – which brings us back to the empty ATMs. As a vacationer or traveler, going to the ATM can lead to some frustration. Long queues often ensure that some ATMs are “empty” faster than one would like and the search for an alternative begins. At the latest after the third empty ATM, the search gets on your nerves and costs a lot of time and nerves. With this knowledge in mind, any opportunity for cash should be taken. In urgent cases, an exchange office (and there are plenty of them) can help. Here one is happy about the exchange of Euro/USD bills. In addition, many shops also accept USD at a self-determined exchange rate, which should therefore only be considered in emergencies.

Key point exchange rate: It doesn’t matter whether it’s an exchange office or a credit card withdrawal – the rate at which the euro is exchanged is very bad everywhere. 10% exchange rate margin (tested with different credit cards and with both local and international banks) is the price you almost always have to pay for the conversion. In addition, the exchange rate of the Mexican peso fluctuates quite a bit, which can sometimes make it a bit confusing. As a world traveler, I can point out the immense importance of a good travel credit card at this point. The common credit card providers or the issuing institutes as well as the ATM operators/POS operators will usually charge a fee when withdrawing and a percentage amount per payment. They also set their own exchange rate, which, with a currency like the peso, will sometimes be disproportionately high. A credit card that switches to the interbank rate is a great way to get around this. However, there are not many options for this on the market.

Tarjeta de crédito – si claro

So do I only need my credit card to withdraw money in Mexico? Fortunately, the answer is no. The strong influence of the USA, which is known to have a high affinity for credit cards, and the presence of many international banks, as well as the corresponding requirements of tourism, make it possible to pay by credit card in more and more places. Restaurants, cafes and co-working spaces, where not only many local digital natives but also international digital nomads cavort, have driven the development. The company Clip, which is comparable to SumUp in Europe, has recently been offering many new and very good options for credit card payments, which Mexican companies are happy to accept. The many artists, manufactories and other sectors that are often driven by tourism are aware that without credit card payments and ATMs that are empty at the same time, it will of course be difficult to generate income. On the one hand, they want to make it easy for the customer (buying a carpet in the Mexican Sierra Norte mountains was just as possible as buying a nice bottle of Mezcal on a remote Mezcal farm), on the other hand, of course, not blocking possible sales opportunities due to the lack of payment options. So how is paying in Mexico? Nobody will be able to avoid cash, unless you spend your vacation exclusively in large hotels. Street vendors and market stalls will continue to only accept cash. However, credit card payments are on the rise, but ultimately only available for higher-priced goods or in tourist areas.

Muchas graces chicas y chicos

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