Introduction to STP and its Role in Digital Remittances
STP, or Sistema de Transferencias y Pagos, is an authorized institution by the Bank of Mexico and the National Commission of Banking and Valuations (CNBV) to facilitate connections between digital remittance providers and Mexico’s Sistema de Pagos Electrónicos Interbancarios (SPEI).
Digital Remittances Dominate Electronic Transfers
Jorge Malanco, Director of Marketing, Communication, and Operational Continuity at STP, explained that 48% of digital transfers reaching Mexico come through apps offering remittance services. These operations generate greater efficiency in time and costs for both the sender and receiver.
According to Malanco, these app-based digital operations account for 99% of electronic remittance transfers entering Mexico in the first four months of the year, as reported by the Bank of Mexico.
Traditional Remittance Methods Still Exist
The remaining transfers are captured through traditional methods, sending cash via a physical remittance outlet to a corresponding institution in Mexico.
STP’s Access to Official Remittance Data
As an authorized entity by the Bank of Mexico and CNBV, STP has access to official data on dollar-directed transfers to the country. This information will be disclosed by Banxico on July 1st.
Marginal Decline in Remittances Due to US-Mexico Initiatives
Malanco mentioned that the flow of remittances to Mexico in May experienced a marginal decline, close to 12% from April. This drop reflects the impact of initiatives by both the US and Mexican governments on migrant workers who have low attendance due to fear of deportation.
Recovery Expected in June
Malanco is optimistic about remittance recovery starting in June, emphasizing December’s shipment data as crucial to determine if 2025 was a positive year for remittance flow. He also noted that maintaining or decreasing 2025’s shipment levels compared to 2024 would indicate a decline.
Financial Sector’s Role in Negotiating with the US
Malanco pointed out that the $65 billion received by Mexican households last year represented a cost-benefit for the US, considering entry and exit commissions. However, he anticipates that the impending 1% tax increase (up from 3.5%) on transfers by the US Congress will erode this gain.
Key Months for Remittance Shipments
May and December typically see remittance shipment increases associated with Mother’s Day and Christmas. However, December has the highest fluence as many Mexican workers in the US return home for a few weeks of rest and send accumulated savings as remittances.
“May experiences a 3.5% to 5% increase compared to other months, while December sees up to a 7.9% boost,” Malanco specified.
Key Questions and Answers
- What is STP and its role in remittances? STP, or Sistema de Transferencias y Pagos, is an authorized institution by the Bank of Mexico and CNBV to connect digital remittance providers with Mexico’s SPEI.
- What percentage of digital transfers to Mexico come through apps? 48% of digital transfers reaching Mexico originate from apps offering remittance services.
- What causes the marginal decline in remittances? The decline is due to US-Mexico initiatives affecting migrant workers’ attendance out of fear of deportation.
- When can we expect remittance recovery? Malanco anticipates recovery starting in June, with December’s shipment data being crucial for determining a positive year.
- How will the US tax increase impact remittances? The anticipated 1% tax increase on transfers is expected to reduce the gains from remittances.
- Which months see the highest remittance shipments? December has the highest fluence, as Mexican workers in the US send accumulated savings before returning home for short visits.
