Orlando Harmon
Mexico operates a public insurance scheme called IPAB, which protects depositors' funds up to $3.1 million pesos, or approximately $181,700 USD per individual, per bank. This insurance is administered by Protección al Ahorro Bancario, a public agency mandated to rescue depositors up to the covered amount when a Mexican bank fails. While IPAB provides peace of mind for depositors, it's important to note that not all firms and investment types qualify for coverage under this scheme. Additionally, some individuals with accounts at Mexican banks covered by IPAB insurance have lost significant amounts due to fraudulent activities by bank employees. As such, it is crucial for depositors to carefully select reputable financial institutions and cross-check with IPAB or independent financial advisors to ensure their funds are protected.
| Characteristics | Values |
|---|---|
| Public insurance scheme | IPAB |
| Insurance coverage | Up to $3.1 million pesos ($181,700 USD) per individual, per bank |
| Foreigners allowed to open accounts? | Yes, but requirements vary by bank and account type |
| Process of opening an account | Similar to the US, but knowledge of Spanish is helpful |
| Documentation required | Official evidence of temporary or permanent residence, proof of address |
| Minimum initial deposit | Varies by bank and account type |
| Popular banks for expats | HSBC, Santander, BBVA Bancomer, Banorte, Scotiabank, CitiBanamex |
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What You'll Learn
Foreigners can open bank accounts in Mexico
Mexico operates a public insurance scheme known as IPAB to protect depositors' funds, but not all firms and investment types qualify for cover. The legal answer is yes, your funds are insured through the Bank Savings Protection Law passed in 1999. The public agency in charge of administering the law is Protección al Ahorro Bancario (IPAB). Their mandate is to rescue depositors up to the covered amount when a Mexican bank fails. Deposits in ordinary savings and checking accounts, payroll accounts, and “term” deposits in basic investments such as bank CDs are covered by IPAB insurance up to $3.1 million pesos. At the current exchange rate, this equates to roughly $181,700 USD in covered funds per individual, per bank.
If you're a foreigner or non-resident in Mexico, you can open a bank account, but it could be challenging, especially if you don't speak Spanish. It's recommended to shop around online and see what banks have the best accounts for your needs. Some banks may let you start your application online, while others may require a visit to a local branch in person. Mexico is home to several major international banks, including HSBC, Banco Santander, ING Bank, and Scotiabank. Scotiabank is a primary Bank of America partner bank in Mexico, allowing customers to withdraw cash without incurring out-of-network ATM fees.
To open a bank account in Mexico, you'll typically need to provide original documents, including proof of residency and address. The required documents may vary depending on your citizenship. For example, US citizens may need to provide an FM2 Immigration credential photo, an FM2 Book with Immigration status, a Temporary Resident Card, or a Multiple Immigration Form. You'll also need to make a minimum initial deposit, which can vary between banks and account types. For instance, the HSBC Simple Flex Account requires an initial deposit of $750 MXN, while BBVA Bancomer's Premium account requires a minimum of $2,000 MXN.
Having a local bank account in Mexico is essential for facilitating your day-to-day finances and settling into the country. It can make it easier to set up utilities, get a cell phone contract, or rent or buy property. Additionally, online-only banks and apps, such as SuperDigital by Santander, offer convenient and low-cost options for sending and receiving money between Mexico and other countries.
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Funds are insured through the Bank Savings Protection Law
In Mexico, bank accounts are insured through the Bank Savings Protection Law, also known as Protección al Ahorro Bancario, which was passed in 1999. The public agency in charge of administering this law is the IPAB (Instituto para la Protección al Ahorro Bancario). The IPAB's mandate is to rescue depositors up to the covered amount when a Mexican bank fails.
The IPAB insurance covers deposits in ordinary savings and checking accounts, payroll accounts, and "term" deposits in basic investments such as bank CDs. The coverage limit is $3.1 million pesos per individual, per bank, which is equivalent to approximately $181,700 USD at the current exchange rate. This means that if a bank fails, the IPAB will guarantee that depositors will get their money back up to the covered amount.
It is important to note that not all financial institutions in Mexico are covered by the IPAB insurance scheme. Some examples of accounts that are not covered include brokerage firms, fintech companies, crypto exchanges, and other non-traditional financial institutions. Additionally, even if a bank is covered by IPAB insurance, there is still a risk of losing money due to internal security weaknesses or fraud, as seen in the case of Banco Monex in 2018.
While the Bank Savings Protection Law provides a level of protection for depositors in Mexico, it is always a good idea to diversify your funds and only keep a portion of your savings in any one institution. It is also recommended to choose larger banks or those regulated by the government, as they are generally considered safer.
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Not all firms and investment types qualify for cover
Mexico operates a public insurance scheme called IPAB to protect depositors' funds. However, not all firms and investment types qualify for cover.
IPAB insures bank deposits in qualifying institutions for up to 400,000 UDIs, which are inflation-indexed currency units. One UDI is currently worth about 7.90 pesos, so the total amount of money insured by IPAB is just over 3.1 million pesos (approximately $181,700 USD in covered funds per individual, per bank).
Deposits in ordinary savings and checking accounts, payroll accounts, and "term" deposits in basic investments such as bank CDs are covered by IPAB's insurance. However, if you choose to deposit your money with brokerage firms, fintech companies, crypto exchanges, or other non-traditional financial institutions, those funds are generally not covered and are at risk of significant loss if something goes wrong.
It is important to carefully consider the organization where your deposits are held and the types of investments made to ensure they are protected under the scheme. While Mexico's banks are well-capitalized and regulated, offers of higher yields from non-regulated investment firms carry a significant risk of losing money to fraud or operational difficulties.
Additionally, U.S. securities firms and investment funds can operate in Mexico through local subsidiaries, but they must meet certain criteria to qualify for arbitration under trade agreements like NAFTA and USMCA.
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Deposit insurance and keeping your money safe
Mexico operates a public insurance scheme known as IPAB to protect depositors' funds. However, not all firms and investment types qualify for cover. IPAB's insurance covers deposits in ordinary savings and checking accounts, payroll accounts, and "term" deposits in basic investments such as bank CDs up to $3.1 million pesos, or approximately $181,700 USD in covered funds per individual, per bank.
While it is not compulsory, it is in your best interest to ensure that the organization where your deposits are held and/or types of investments held are protected under the scheme. It is recommended that you cross-check directly with IPAB or your independent financial adviser, which provides a list of banks, financial institutions, and types of investments that are covered.
It is also important to note that if you choose to deposit your money with brokerage firms, fintech companies, crypto exchanges, or other non-traditional financial institutions, those funds are generally not covered and are at risk of significant loss if something goes wrong.
If you are a foreigner considering opening a bank account in Mexico, it is important to note that you cannot open a Mexican bank account remotely from the US. Some Mexican banks allow members to open accounts online, but this feature is typically restricted to Mexican citizens. Most Mexico banks are controlled by foreign entities, so you may see familiar names like Santander and HSBC. However, only one of the seven largest banks that control 78% of the Mexican market is owned by an American bank: CitiBanamex.
To open a bank account in Mexico as a foreigner, you will usually need to provide official evidence of temporary or permanent residence and a utility bill as proof of address. The process of opening a bank account in Mexico is similar to the process in the US, but it may be challenging if you do not speak Spanish as not all banks have English-speaking staff, and websites and forms may be in Spanish.
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Alternatives to opening a bank account in Mexico
Mexico operates a public insurance scheme known as IPAB to protect depositors' funds, but not all firms and investment types qualify for cover. While Mexican banks are well capitalized and among the first to implement new stricter global capital standards, there are alternatives to opening a bank account in Mexico. Here are some options:
US-based savings or checking account
A US-based savings or checking account with FDIC insurance of up to $250,000 USD can be a good alternative. Look for an account with an excellent mobile app and website, and international wires at low or no cost. Keep in mind that you'll have to report all foreign bank accounts with balances over $10,000 USD to the IRS.
Basic brokerage account
Consider opening a basic brokerage account with companies like Schwab or Fidelity, which offer reimbursement for ATM fees incurred in Mexico.
Wise account
Wise is an international money transfer service that allows you to send and receive money between the US and Mexico quickly and at low cost. You can open an account for free and even order an international debit card to spend in the local currency in numerous countries, including Mexico.
PayPal account
Although not ideal for some, PayPal is a frequent "alternative payment" option on Mexican company websites and can be useful if you don't have a Mexican credit card or local bank account.
Digital-only banks and apps
If you're looking for a convenient and low-cost way to manage your money, consider digital-only banks and apps such as SuperDigital, an account offered by Santander in Mexico.
It's important to note that while these alternatives offer flexibility and convenience, they may not provide the same level of accessibility and security as a local bank account in Mexico. Additionally, some options may have specific requirements, such as proof of residence or minimum initial deposits.
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Frequently asked questions
Yes, bank accounts in Mexico are insured through the Bank Savings Protection Law passed in 1999. The public agency in charge of administering the law is Protección al Ahorro Bancario (IPAB). IPAB provides insurance up to $3.1 million pesos, or approximately $181,700 USD in covered funds per individual, per bank. However, not all firms and investment types qualify for cover.
IPAB covers deposits in ordinary savings and checking accounts, payroll accounts, and "term" deposits in basic investments such as bank CDs.
Yes, there are a few alternatives to opening a bank account in Mexico. One option is to use a U.S.-based savings or checking account with a good mobile app and low or no-cost international wires. Another option is to open an account with a company like Wise, which offers a low-cost way to transfer money between U.S. and Mexican bank accounts.
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