Why is it so Hard to Get $ Change in Mexico?

A lot of people find that when buying things in Mexico, either people don’t have change or have a hard time giving change. It might even be that a business will refuse to sell you something just because they don’t have change, putting the onus on the customer to provide payment in smaller bills. So why is getting and making change in Mexico so hard? Here are the reasons, some solutions and just an insight into the culture here so you can shop like a pro and be prepared with change for your purchases.

Mexico is a Cash Society

It is easy to forget how many times you use a card to pay for things or tap something and no cash is used. However, in Mexico, things are not the same. Cash is used a lot more in Mexico than most countries. For example, in the United States cash purchases make up about 20% of purchases. In Mexico cash is used in about 60% of purchases. This means cash is used much more in Mexico and each time more and more change is needed. This is one aspect of why getting change is hard in Mexico.

So why is cash used so much in Mexico? Mexico is one of the most underbanked countries in the world. About half of all households in Mexico do not have a bank account. Rural areas have few banks, many poor don’t have enough to put in a bank or never joined the formal economy. It is something that is slowly changing, but don’t expect Mexico to change overnight and don’t expect getting change in Mexico to get easier anytime soon.

Credit Crunch

Added to the problems of an informal economy built on cash is the lack of ability to start a credit history. Having a population with spotty credit history limits who can get credit cards. This is a hurdle that Mexico is slowly tackling. Until more people can have access to credit, cash will remain the most common form of payment and getting change will remain difficult.

Many self-employed people or small businesses do not accept credit and debit cards because of the paper trail or the fees that are taken out for the payments. This also adds to the dependency on cash in Mexico.

Inflation is Partly to Blame in Mexico

Inflation in Canada, the United States and the European Union has been all around 2-3% lately. Mexico on the other hand is around 5%. This means that prices rise faster and large bills or more bills are needed. In the 1990’s there were times the inflation rate rose to over 50% in Mexico. Inflation affects how currencies are paired. The Mexican Peso was once 3 Pesos to the USD in the 1990’s, but then high inflation came, and the exchange rate climbed to the current rate of about 20 Pesos to the USD. This means that prices had to rise in Mexico. Things that cost $20 USD back in the 1990s would be about 60 pesos with the exchange rate. Nowadays the same $20 USD Item in today’s Pesos is 400 Pesos. This creates reliance on larger bills to be used and the need for more units of money for change.

Imagine if you went to your grocery store for $100 USD of food. But now due to inflation it costs $2000 USD. Now you are going to need to carry more bills and bigger bills so it all fits in your wallet. You can imagine how much a problem it would be at the checkout with people bring larger bills and needing a wide range of change. This is where Mexico is now. So why does Mexico just devalue the currency to work to bring exchange rates closer to other currencies? We will talk about this next.

Mexico Benefits from a Weak Currency

So why does Mexico not try to have the Pesos on par with other global currencies? One reason is the benefits to the economy. Having a weak currency has disadvantages and advantages. For the Mexican economy the advantages often outweigh the disadvantages. A weak currency encourages tourism and exports since they will be cheaper for other countries to buy. Tourism accounts for 7-9% of GDP and exports account for about 40% of the GDP. So almost half of the Mexican GDP is accounted for by these two sectors. This means there will be pressure to keep the exchange rates near where they are now, and that getting change will still be an issue.

How to Get Change and Small Bills in Mexico

This is the part where you have to think ahead when you are heading out. I always check my wallet before going to the store to scan what bills I have. I don’t want a surprise at the register and find that I only have a 500 note. When foreigners live in Mexico for a while, they often learn to think a lot about change because it is something you are always dealing with. So, what are some tips on getting change and how to operate in a change challenged society?

Number one, before you leave for the day, think about what purchases you need to make and where you need to pay. In general, pharmacies, grocery stores, and big box stores are places where you don’t have to worry too much about making change. These businesses operate with a lot of change and are usually not places where getting change is an issue. Most issues arise at small businesses, street venders, and taxi drivers.

Tips for getting change in Mexico

ATMs will often give 500 notes and only a few small notes. This is easier for the ATM to be restocked and since most people take out 1000-6000 pesos at a time, this works. One tip is to put in another amount like 1,900 pesos. This guarantees you some notes less than 500. Remember that almost all Mexicans get paid in the 1st and 15th of each month. So, ATMs are often out of cash around these dates.
Plan purchases and pay for larger purchases with larger bills. For example, at the grocery store pay for the 1,655 pesos purchases with 4 (500) bills which gets you 345 pesos change.
Some ATMS will give smaller bills. This often happens in smaller towns where a majority of the bills can be 200 notes.
You can ask at a bank window for small bills or to change bills. This works but often there are long lines which don’t make this very convenient.
When you exchange money, ask for smaller bills. Try not to take a 1000 note. Having 200 notes or smaller will make purchases easier.
Large hotels will often make change at the front desk for guests.
In the Riviera Maya most grocery stores and big box stores will accept USD. The rate is often better than exchange places. The change is given in Pesos. The law states you can only use $250 USD at a time to purchase (about 5000 pesos). So, if you bill is 3000 pesos, and you pay with 2 (100 USD notes) you would get about 1000 Pesos change.

Lifehacks for dealing with change and purchases in Mexico

Keep change in your car for parking meters and when you need to buy small purchases. It also is there for tips. Tips for the people that put carboard on your windshield when you park at an outside parking lot at a grocery store or helps you back out of your spot.
Keep change by the door in your home. Having a little change to run out to the corner store or for people coming by your home selling plants, honey or other small things.
If a purchase is 325 Pesos, I will often give 525 Pesos and get 200 Pesos back. Making the change easier for the merchant will often get you better results.
Put a few coins in your wallet for emergencies. For example, when a charge is 405 pesos, you have 5 pesos to make it much easier for change.
The time of day makes a difference. Early in the day a small business will be less likely to make change for you because it means they will not have change for the next customers. In the middle of the day when cash is flowing, merchants worry less about give change.
If you do have a large bill, I will sometimes ask the seller before the purchase if they have change. This at least gives a chance to figure a solution before getting to the point of sale.
Sometimes buying something more will reduce the amount of change and make it easier for the merchant.

Conclusion

Getting change in Mexico is just one of the things that is different from other countries in the world. To read more about cultural differences and things that are different in Mexico, see our article here.

Do you have some tips for getting change in Mexico? Share them below with other readers below in the comment section.