Remittances and money transfers from the US: everything you need to know
Each year, more than 174 billion dollars to Latin America and the Caribbean from different parts of the world, with the United States being the main source: it represents 96% of the remittances that Mexico receives and more than 73% of those that arrive in Central America. This money reaches Mexico, Guatemala, Honduras, El Salvador, Nicaragua, Colombia, the Dominican Republic, Ecuador and Peru, among other countries.
For decades, sending money was complicated and expensive. You had to go to an office, stand in line, pay high commissions and wait for days. Today, the landscape changed completely. Digital services allow you to send money in minutes, from your phone, without leaving your home, and with much lower rates than before.
Sending a remittance isn't just a financial transaction: It's paying your mom's rent. It's that your children go to school. It's just that your brother can buy medicine when he needs it. It's the most concrete way to tell your family: “Here I am, even if I'm far away.”
This guide is designed to help you understand everything you need to know about sending remittances from the United States: how the system works, what methods are available, how much it actually costs, how to protect yourself from fraud, and what about taxes.
1. What is a remittance and how does the system work
A Remittance It is a money transfer that a person sends to another person in a different country, usually a family member. The term comes from the verb “to send”, which means to send.
In the context of migration, remittances are the shipments that immigrant workers make to their countries of origin to support their families.
How money moves from point A to point B
Although it seems simple from the outside (you open an app, enter the amount, and the money arrives), behind each shipment there is a process that involves several steps:
- You start shipping: Enter the amount you want to send and the details of your Payee (the person who will receive the money). The service provider shows you the commission and the exchange rate before you confirm.
- The supplier processes the order: The service receives your payment (either from your bank account, debit card, or cash) and records it in its system.
- The currency conversion: If the destination country uses a currency other than the dollar, the provider converts the amount at the current exchange rate. This process can occur in seconds or can take up to a day, depending on the service.
- The Money Reaches Its Destination: The provider transfers the funds to a local bank, a cash payment network, or a mobile wallet in the recipient's country.
- Your family member receives the notification: Depending on the delivery method, your payee receives a deposit in their account, an alert to pick up the cash, or a notification in their digital wallet.
Who is involved in the process
In each shipment there are several actors:
- You (the sender): The person sending the money from the U.S.
- The Beneficiary: The person who receives the money in the destination country.
- The service provider: The company that facilitates the transfer (Felix, Remitly, Wise, Western Union, your bank, etc.).
- Correspondent banks: The local banks in the destination country that receive the funds and distribute them.
- The Regulators: Government entities that oversee that the entire process is legal, safe and transparent.
The regulatory framework in the United States
Sending money from the U.S. is a regulated activity. Companies offering remittance services must be registered as Money Services Business (MSB) before the FinCEN (Financial Crimes Enforcement Network), a division of the Department of the Treasury. In addition, many states require their own licenses to operate.
La CFPB (Consumer Financial Protection Bureau) protect your rights as a consumer. Thanks to the CFPB Remittances Rule, any registered supplier must inform you before each shipment: the exact amount your payee will pay, the exchange rate applied, all fees, and the estimated delivery date. If something goes wrong, you have the right to dispute it and, in many cases, to cancel the shipment within the first 30 minutes.
Knowing how the system works empowers you. When you understand the rules, you can better choose the service that best suits your situation.
2. Methods for sending money to Latin America
Not all shipping methods are the same. Each one has advantages and limitations. The best option depends on factors such as: how quickly the money needs to arrive, if your family member has a bank account, and how much you are willing to pay in fees.
Bank transfer
Una Bank transfer is the sending of funds directly from a bank account in the U.S. to a bank account in the country of destination. This process generally uses the SWIFT network for international movements.
It's a reliable and well-regulated method, but it has clear drawbacks: the cost is high (between $25 and $50 per transfer to most banks), the delivery time can be 2 to 5 business days, and both the sender and the payee need active bank accounts. For one-off shipments of large amounts, this may be an option. For regular monthly remittances, it's generally not the most affordable.
Digital services and apps
Digital services are today the most popular way to send remittances. Platforms such as Felix, Remitly, Wise and others have transformed the market by offering fast transfers (usually in minutes or a few hours), much lower fees than banks, and the convenience of doing everything from the phone.
Felix works directly via WhatsApp. You don't need to download a separate app or create an account on a new site. If you already use WhatsApp, you already have everything you need. It's especially convenient for people who aren't used to using multiple financial apps or who prefer to communicate in a familiar environment.
Cash delivery (physical agents)
Cash agents, such as stores that offer shipping services, are still a valid option, especially when the payee doesn't have a bank account and prefers to pick up the money in person. The service usually takes between one and two hours to be available. Commissions are variable and generally range from $5 to $15 per shipment.
This option requires the sender to physically go to a location. For many people with tight schedules, this can be an inconvenience.
Money Orders
Money orders are pre-printed payment instruments that are purchased with cash and sent by mail. They are a traditional option that is in clear decline. They are slow (3 to 7 days), relatively uncomfortable, and can be misplaced. Nowadays, there's little reason to choose this method over digital alternatives or cash agents.
Comparison of methods
In most cases, digital services offer the best combination of speed, cost, and convenience. The key is to know which service within that category gives you the best total price, and that's what we explore in the next section.
3. Costs: commissions, fees and hidden charges
There are two parts to the cost of sending a remittance. Many people only see the first one and don't notice the second. Understanding both is essential in order not to overpay.
The commission and the exchange rate margin
La Perpetation Is the explicit charge that the service charges you for shipping. This can be a fixed fee ($2.99, $4.99) or a percentage of the amount sent.
But there is a second, less visible cost: the Margin in the exchange rate. The provider applies their own exchange rate, which is almost always less favorable than the market exchange rate (called the interbank rate or “mid-market rate”). The difference between the two rates is profit for the provider and a hidden cost for you.
Why “$0 commission” isn't always the cheapest option
Some services are advertised with “no commission” or “zero fee”. What they don't say so clearly is that they make money through exchange margin. The result may be that your family member receives less money than if you had used a service with a commission but with a better exchange rate.
The only way to properly compare two services is to look How much does your family member receive, not how much you pay.
How to calculate the real cost: a concrete example
Suppose you want to send $300 to Mexico.
- Service A: charges $3.99 in commission and applies the market rate. Your family member receives 6,045 Mexican pesos.
- Service B: it says “no commission” but applies a margin of 2% on the exchange rate. Your family member receives 5,880 Mexican pesos.
Service A is cheaper in real terms, although it charges a visible commission. Service B seems cheaper but in practice it costs you more.
Always compare using the final number your payee receives.
Typical costs for brokers
These are indicative ranges based on market averages. Actual costs vary depending on the vendor and the amount shipped:
- Mexico: generally between $2 and $5 fixed rate, or an exchange margin of 0 to 2%.
- Guatemala, Honduras, El Salvador, Nicaragua: Between $3 and $7 per shipment.
- Colombia and the Dominican Republic: Between $3 and $6 per shipment.
- Ecuador and Peru: Between $3 and $6 per shipment.
Tips for reducing what you pay
- Always compare using the amount your family member receives, not just the commission.
- Look for promotions for new users: many services offer the first shipment without commission.
- Send larger amounts less frequently if your situation allows it: some fixed fees are diluted into larger amounts.
- Use digital services instead of physical agents when the payee has a bank account.
Felix offers transparent pricing: what you see is what you pay, with no surprises in the exchange rate.
4. The exchange rate: how it works and how to take advantage of it
La Exchange rate is the price of one currency expressed in terms of another. If the exchange rate of the dollar to the Mexican peso is 20.15, it means that for every dollar you send, your family member receives 20.15 pesos. If the rate was 19.80, you would receive less. The difference seems small, but it adds up.
The market rate and the supplier's margin
La Market rate (or interbank rate) is the “real” exchange rate that banks use against each other. It's the price without margin, the right reference point. You can check it out by Googling “Mexican peso to dollar” or going to xe.com.
Remittance providers don't give you that exact rate. They apply a margin, which usually ranges from 0.5% to 3%, depending on the service and the broker. That margin is part of how they make money.
A 1% difference may seem minimal, but if you send $300 a month, that 1% equals $3 per shipment, or $36 a year that your family doesn't receive.
Exchange rates fluctuate
Foreign exchange markets move in real time, 24 hours a day, 7 days a week. The rate you see in the morning may be different than in the afternoon. Some providers block the rate the moment you confirm the shipment. Others apply the current rate at the time the money arrives at its destination. It's important to know which of the two methods the service you choose uses.
How to check the rate before shipping
- Google the current rate of the currency pair you're interested in (for example, “dollar to Colombian peso”).
- Compare the rate offered to you by the provider against that reference.
- Use Felix's exchange rate tools to see the rate in real time: /Dollar-Today/Mexico-MXN, /dolar-today/guatemala-gtq, and other currencies in the region.
A Practical Tip for Large Amounts
If you're sending a large amount, such as paying for several months of family expenses, it's worth comparing the rate across two or three services on the same day. A half percentage point difference in a $1,000 shipment is $5 less than your family receives. Ten dollars or twenty dollars of difference already changes the decision.
5. Sending Money by Country: Guide by Broker
Each country has its own ways of receiving money, its own currency, and its own peculiarities. Here's a summary of what you need to know for each runner.
Mexico
Sending money to Mexico It is the highest-volume corridor since the United States There are many options available: bank deposit through the SPEI system using the CLABE (the 18-digit account number used by all banks in Mexico), cash withdrawal on networks such as OXXO or at bank branches, and mobile wallets. Competition is high in this broker, which generally translates into better rates for the shipper.
Guatemala
Sending money to Guatemala is mainly done through bank deposit and cash withdrawal at local agents. Many families in rural areas rely on cash because they don't have access to full banking services. It's important to confirm with your payee which method is most comfortable for them before shipping.
Honduras
Sending money to Honduras works in a similar way to Guatemala. Bank deposit and cash withdrawal through agents are the primary methods. Cash agent coverage is extensive in major cities, but may be limited in rural areas.
Saviour
Sending money to El Salvador has a particular advantage: El Salvador uses the US dollar (USD) as its official currency. That means there's no currency conversion, and your family member receives exactly the amount you send in dollars. Bank deposit and cash withdrawal are the main options.
Nicaragua
Sending money to Nicaragua It uses the Córdoba (NIO) as its currency. Bank deposit and cash withdrawal are the available methods. Digital wallet options are more limited than in other countries in the region, so you should confirm with your beneficiary the most accessible method for them.
Colombia
Sending money to Colombia has one of the most advanced digital ecosystems in Latin America. In addition to traditional bank deposits, platforms such as Nequi and Daviplata allow you to receive money directly in mobile wallets that don't require a traditional bank account. Cash withdrawal is also available through agent networks.
Dominican Republic
Send money to the Dominican Republic is one of the most active runners in the Caribbean. Bank deposit in Dominican pesos (DOP) and cash withdrawal are widely available. The agent network is strong both in Santo Domingo and in secondary cities.
Ecuador
Sending money to Ecuador is a new broker in Felix, available since March 2026. Ecuador also uses the U.S. dollar as its official currency, so there is no currency conversion. The main method of receipt is bank deposit.
Peru
Sending money to Peru is another new broker from Felix, also available since March 2026. The currency is the Peruvian Sol (PEN). The main methods are bank deposit and cash withdrawal through agents.
Summary by country
6. Security: How to protect yourself and avoid fraud
The remittance industry, unfortunately, is a frequent target for scammers who take advantage of the trust and emotional urgency of people who send money to their families. Knowing the warning signs can save you a lot of money and heartbreak.
Common scams affecting Latinos in the U.S.
Family Emergency Scams: Someone calls or writes to you saying that a family member of yours is in danger, in detention, or in the hospital, and needs money right away. Urgency is a deliberate tactic to get you to act without thinking. Before sending anything, call your family member directly by another means to confirm.
Lottery or Prize Scams: They tell you that you won a prize, but that you need to pay a fee or tax to receive it. No legitimate prize asks you for money in advance.
Impersonation of authorities: Someone impersonates an agent of the IRS, ICE, or the police and tells you that you owe money or that you have legal problems. They ask you to pay immediately by transfer, gift cards, or cryptocurrency. Government agencies never work like that.
Fake sites and apps: Some scammers create websites or apps that mimic legitimate services. Always verify that the URL is correct and that the site has real contact information.
Warning signs
- Pressure to act immediately, with no time to think.
- Request for payment through gift cards (iTunes, Google Play, Amazon), cryptocurrency, or anonymous cash transfer services.
- Contact information that cannot be verified (no phone, no address, no visible license).
- Promises of extraordinarily good exchange rates or no commission.
How to verify that a vendor is legitimate
- Look up the name of the company in the FinCEN MSB registry on fincen.gov.
- Check if you have state licenses. Many services list them on their legal terms page.
- Confirm that you are registered with the CFPB at consumerfinance.gov.
- Read reviews on Google, Trustpilot, or app stores.
Your Rights as a Consumer
Thanks to the CFPB Remittances Rule, any registered vendor is required to provide you with a pre-payment statement that includes the exact exchange rate, all fees and the amount your payee will receive. You have 30 minutes after starting the shipment to cancel it without penalty.
If something goes wrong, the first step is to contact the supplier directly. If they don't resolve the issue, you can file a complaint with the CFPB at consumerfinance.gov/complaint.
Felix is a licensed, encrypted, and transparent pricing service. If you have any questions or problems, you can contact our support team directly via WhatsApp.
7. Remittance taxes and regulations
One of the most common questions we receive is: “Do I have to pay taxes to send money?” The short answer is: in most cases, no.
For the shipper in the US
Sending money to a family member abroad It's not a tax-deductible expense, but it's not a taxable event either. You're transferring money that you've already earned and that you've already paid taxes on. You should not report it as additional income or pay additional taxes for the shipment itself.
The only exception is the Gift Tax. If you send more than $19,000 to a single person in a calendar year (the limit for 2026), you are technically required to file Form 709 with the IRS. In practice, however, you should only pay gift taxes if your total lifetime donations exceed $15 million (exemption for 2026). For most people, this will never be a real problem.
For the beneficiary abroad
In most Latin American countries, family remittances are not subject to local taxes. However, if you receive very large amounts or very often, local authorities may ask for explanations about the source of the funds. It's recommended that your payee check with a local accountant if they handle significant amounts.
Reports and Regulatory Limits
Remittance service providers are required to submit a Currency Transaction Report (CTR) before the U.S. government when a cash transaction exceeds $10,000 in a single day. This is an automatic legal requirement, not an accusation.
What can cause serious problems is the Structuring: Intentionally dividing a large amount into several smaller shipments to avoid crossing the $10,000 threshold. That's illegal, even if the money is completely yours and comes from a legitimate source.
Users with ITIN (Individual Taxpayer Identification Number) can send remittances normally. Most digital services, including Felix, don't require a social security number. For more information about the ITIN, you can check out our guide to documents for immigrants.
The new 1% federal tax on remittances (as of January 2026)
In July 2025, the United States government passed the law known as the “One Big Beautiful Bill Act”, which includes a 1% federal tax on certain transfers of money abroad. This tax took effect on January 1, 2026 and applies directly to the transaction at the time of shipment.
The most important thing to know: the tax only applies to transfers paid in cash. If you pay for your shipment from a bank account, debit card, or credit card, you are exempt. Payments in cash, money orders, or cashier's checks are subject to the tax.
In practical terms:
- If you use a digital service like Felix and pay from your bank account or debit card: You Don't Pay the 1%.
- If you go to a store to pay for your shipment in cash: the supplier is required to charge the additional 1% and reports it to the IRS.
The tax is automatically charged by the service provider at the time of the transaction. You don't have to calculate or pay for anything separately. If it applies to your shipment, you'll see it reflected in the cost breakdown before confirming.
This is one more argument for preferring digital services with payment from a bank account: in addition to being faster and cheaper, they are beyond the scope of this tax.
8. The future of remittances: where the sector is going
The remittance market is changing faster than at any time in its history. And the changes go in one direction only: faster, cheaper, and more accessible to everyone.
The Shift to Digital
In 2010, most remittances were sent in cash through physical agents. Today, in the United States-Latin America corridor, digital and cash transactions are almost on par, and digital channels continue to gain ground every year. The pandemic accelerated this transition and many people who had never used an app to send money discovered that it was easier than they thought.
The trends that are shaping the sector
Real-time payments: Instant delivery is no longer a differential advantage and is becoming the standard. Instant payment networks such as SPEI in Mexico or real-time ACH in the US make it possible for money to arrive in seconds.
Conversational Finance: Services like Felix take this trend to the next level. When sending money occurs within WhatsApp, there's no learning curve or new passwords to remember. Technology disappears and what's left is a natural conversation, like when you say to a trusted friend: “Send $200 to my mom.”
Lower costs: The World Bank established the objective of the Sustainable Development Goal (SDG) to reduce the global average cost of remittances below 3% of the amount sent. Technology is making it possible to reach that threshold. In some brokers, the costs are already below 2%.
Financial Inclusion: For many Latinos in the U.S., the first digital financial service they use is a remittance service. That gateway is becoming the starting point for accessing more products: bank accounts, credit, savings, and investment. Remittances are the first step in a longer financial journey.
What this means for you
More options, better prices, faster transfers and, over time, a complete financial platform from the same tool you use to talk to your family.
