This guide explains what US and Canadian importers must know about paying Mexican export manufacturers and wholesalers. We cover wire transfers, letters of credit, and card payments. In addition, we also explain which currencies are normally accepted – and how you can reduce the risk of payment fraud and other payment-related scams in Mexico.
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Currencies
The standard currency for supplier payments in Mexico is, at least in our experience, USD. Paying Mexican suppliers in other currencies, such as CAD or EUR, may only be possible as long as the receiving bank can convert the currencies for your supplier.
Wire Transfer
As long as your manufacturer or wholesaler in Mexico has a corporate bank account they can receive wire transfers. This is also the preferred way to get paid for suppliers in the country.
Be aware that once a wire transfer is sent, you are at the mercy of the supplier. How this risk can be managed is further discussed below.
Required information
- Company name
- Company address
- Bank account number
- SWIFT code
- Bank name
- Bank address
Bank transfer fees
Most suppliers expect you to cover the bank transfer charges, both from the sending and receiving bank. Keep in mind that Mexican suppliers generally quote and invoice the amount they expect to receive. These fees tend to range between 40 to 80 USD.
This is not unique to suppliers in Mexico but applies to those in other countries as well.
Payment terms
The standard payment terms when paying via wire transfer is either a 30% or 50% deposit. You should only pay the remaining balance after quality inspections are passed – and
Payment frauds
There are various types of payment frauds, but the most common tend to involve switching bank account details. In short, someone working for the supplier – or hackers – sends an invoice with bank account details that are not those of the company.
It is therefore critical that you look at the following before you pay any invoice:
1. Does the company name match your supplier’s name?
2. Has anything in the bank account details changed since your previous payment? (compare older invoices)
3. Is the bank actually in Mexico or is this an offshore account?
In short, the beneficiary should be a company in Mexico. It should not be an offshore entity or a personal bank account.
Letter of credit
If you are not comfortable with the risk of wire transfers that are essentially one-way payments – then you can consider a letter of credit. A letter of credit can be issued in USD or Mexican pesos, and work in the following way:
1. You set the conditions for payment. This can, for example, include the following:
- The Mexican exporter must provide a bill of lading
- They must also provide a signed quality inspection form*
*You should clarify who should sign this, to prevent fraud.
2. Your bank informs the supplier’s bank in Mexico – and the money will be paid once the required documents are provided by the supplier.
3. The payment is released.
4. You now pay the bank – in full or in installments.
The benefit is that you don’t need to pay a deposit, which reduces the overall risk. However, you must be very careful when it comes to setting the conditions and required documentation for the letter of credit.
Credit card
It is very rare that export manufacturers in Mexico accept any form of card payment. Most suppliers would not accept the risk of shipping goods for tens of thousands of dollars only to receive a chargeback that they have no realistic way of fighting against.
FAQ
How can we get a credit line from our suppliers in Mexico?
In my experience, it is fairly rare that export factories and wholesalers extend a credit line to SMEs. They tend to have fairly small margins, and a delayed payment or, worse, a canceled payment could wipe them out.
It’s a different story if you are Walmart or Disney, but at Productmkr.com we only work with SME buyers rather than big retailers and the like.
All I can say is that I have not heard of a single of our customers being given a credit line from a Mexican supplier.
Do Mexican suppliers accept United States Dollars (USD)?
Yes, suppliers tend to accept USD payments either via wire transfer or letter of credit.
Can we pay Mexican suppliers in Mexican pesos (MXN)?
We know that letters of credit can be set in Mexican pesos, but whether you can pay in the currency via wire transfer would depend on your bank.
Do Mexican suppliers accept Canadian Dollars (CAD)?
Our understanding is that you can send wire transfers in CAD, but that the funds are converted upon arrival in Mexico by the supplier’s bank account.
