Background and Relevance of the Person Mentioned
Fintech México, a prominent association representing fintech companies in Mexico, has voiced strong opposition to a proposed legislative measure in the United States (US) that seeks to impose a 5% tax on remittances sent abroad. This development is significant as it directly impacts millions of families, financial inclusion in the region, and the growth of digital payment ecosystems.
Details of the US Proposal
The proposal, introduced on May 12 by the Media and Communications Subcommittee of the US House of Representatives, is part of a broader legislative package called “One, Big, Beautiful Bill,” championed by former President Donald Trump. This package addresses various fiscal, social, and environmental issues, including a 5% tax on international transfers that could be classified as remittances.
Under the proposal, money transfer service providers would be responsible for withholding and remitting the tax to the Treasury Department. An exception is made only for remittances sent by US citizens through authorized providers.
Fintech México’s Concerns
In response to this initiative, Fintech México has highlighted multiple potential negative impacts of such a tax on the financial system, recipient households’ economies, and digital ecosystem development.
- Impact on Families: The association warns that the increased cost of remittances due to the tax will directly affect millions of families, being a deeply regressive measure that disproportionately penalizes the less fortunate.
- Push Towards Informal Channels: Fintech México cautions that such measures may drive people towards informal or cash-based channels, increasing security risks and making it difficult for governments to track resources.
- Limited Competition and Accessibility: The creation of an authorized provider figure could reduce market competition and limit access for new entrants, ultimately driving up costs for end-users.
Call to Action by Fintech México
Fintech México urges US legislators to reconsider the measure and explore cooperative dialogue options that do not compromise innovation or financial inclusion.
“We encourage the US House of Representatives to seek alternative mechanisms based on mutual understanding and dialogue, allowing us to continue developing and offering our services across the region, contributing to financial inclusion and the well-being of millions of citizens from North America,” Fintech México stated.
Remittances’ Importance in Mexico
In 2024, Mexico received $64.745 billion in remittances, making it the largest recipient in Latin America, with most of these funds originating from the US. According to Mexico’s central bank (Banxico), 99.1% of remittance income was conducted through electronic transfers, reflecting the growing digitalization of these transactions.
Threat to Technological Development
Fintech México emphasizes that the proposed tax threatens the development of technologies such as mobile wallets, blockchain platforms, and stable cryptocurrencies, which are revolutionizing cross-border money transfers.
“Imposing a tax on remittances reduces transaction volume and discourages investment in technological solutions like mobile wallets, digital payments using stablecoins, and blockchain platforms that are transforming how money is sent between countries. This measure directly undermines the development of safer, more efficient, and inclusive tools,” Fintech México highlighted.
