How to Pay for Goods and Services in Mexico

Are Dollars, Pesos or Credit Cards Best Way to Buy Mexican Products?

Oct 6, 2009

Although U.S. dollars are readily accepted by stores, restaurants and street vendors, there are far more economical ways to purchase items and services in Mexico.

Exchange rates, commissions and fees all impact the actual cost of Mexican purchases. Other considerations include convenience, record-keeping and safety.

Options for Tourists When Buying Goods and Services in Mexico

Pesos are always accepted by any vendor, and U.S. dollars are rarely declined. Larger stores and restaurants, most hotels, tourist-oriented shops and some gasoline stations accept credit cards. Personal checks are accepted only at some hotels, and traveler's checks are almost as difficult to use. Underscoring the use of any of these options is the added, often hidden cost of each choice.

Tourists should understand the advantages and disadvantages of each option, including any corresponding cost. Being prepared to exercise more than one option is always wise.

Buying Goods and Services in Mexico with U.S. Dollars

Few vendors anywhere in Mexico, regardless of size, will refuse U.S. dollars. Even the least sophisticated street vendor knows the floating bank rate of exchange for dollars, and is well-prepared to use it to his advantage. This "street rate", used by vendors large or small, is typically 30-40% less favorable than the bank rate. For example, if the bank rate of exchange is 14 pesos per dollar, purchases made with dollars will often be calculated at 10 pesos per dollar. Consequently, travelers buying with cash are well-advised to carry pesos, instead of dollars.

In some places, shopping with dollars could also mark the tourist as someone with more money than brains, not exactly the image one wants to convey while wandering the streets. The occasional use of dollars, say for tipping, is not unwarranted, and sometimes it's unavoidable. However, a small deposit, or even your word will usually hold a desired item until you can return with pesos.

Shopping with Pesos in Mexico

Since most prices are posted in pesos, shopping with pesos generates no exchange penalty. On the other hand, there may be fees in obtaining those pesos, and travelers should know the how and where to exchange dollars for pesos.

Prices for goods and services in Mexico are posted in pesos, and a dollar sign refers to pesos unless specifically noted as "U.S." or "dollars". Peso coins are available in denominations of 1, 2, 5, 10 and 20 pesos, and notes are printed in denominations of 20, 50, 100, 200, 500 and 1,000 pesos. Note that smaller stores and vendors may not accept 500 or 1,000 peso notes. Consequently, travelers should focus on smaller bills, and use the larger ones at supermarkets, such as Soriana, or gas stations to obtain change. It is always useful to keep a diverse range of small bills and peso coins, especially when dealing with street or beach vendors.

Using a Credit Card for Purchases in Mexico

Credit cards are increasingly accepted in Mexico, especially in larger cities, popular tourist areas and at larger stores and businesses. Cards have rarely been accepted at PEMEX gas stations, but even that is beginning to change. Credit cards offer the advantage of convenience, documentation (receipts) and an audit trail, as well as other protections often provided by the issuing bank. Using a card is also safer than carrying cash, either dollars or pesos.

Small shops, street vendors and almost all gas stations, however, do not accept credit cards. In addition, shops, hotels and other businesses in smaller or remote locations are less likely to accept credit cards.

Furthermore, paying for purchases in Mexico with a credit card almost always results in a "foreign exchange" transaction fee from the issuing bank. This fee typically is 3%, significant enough that travelers should weigh that cost against the advantages of the card. Check with your card company before departing to determine what charges would apply in Mexico.

The Best Option for Payment of Purchases in Mexico

Travelers should not rely on any single option exclusively. Converting dollars to pesos, and buying goods with pesos may be the most economical alternative, but there are occasions when the advantages of a credit card clearly dictate its use. Smart travelers should carry two different credit cards, two different ATM debit cards, some backup funds in traveler's checks and sufficient cash to cover less-than-major purchases. An effort also should be made to maintain a range of peso bills and coins.

The copyright of the article How to Pay for Goods and Services in Mexico in Mexican Travel is owned by Bob Bowers. Permission to republish How to Pay for Goods and Services in Mexico in print or online must be granted by the author in writing.