Tuesday, July 11, 2017

In Mexico, in No One we trust


Capitalism requires trust among the players. 
Maybe that's why it doesn't work so well in Mexico.

Two-and-a-half years ago we got the notion to apply for an ATM card from Interbank, a mutant of Intercam, the financial organization where we'd kept our money for close to ten years. 

We talked to Victor, a bespectacled bank clerk and lone occupant of a stifling, barebones office on the second floor of Intercam's tiny branch in a shopping center on the outskirts of San Miguel. 

Forget handshakes. What's the color of your house?
So many questions Victor asked it felt as if we were applying for a job at a North Korean missile factory. Parents' names, place of birth, former employer and line of work, plus innumerable documents, from passports, visas, statements from banks in the U.S., property tax receipts, a copy of the deed to our house and phone bills.  

In addition, Victor asked for a physical description of our house, including the color of the front door. 

Such inquisitions of potential customers are not unusual. Two friends who had applied for a cell phone account at Telcel, which owns a near-monopolistic share of the cell phone market in Mexico, put me down as a reference. And so someone from Telcel called me to ask about the color of my friends' house in the Los Frailes neighborhood of San Miguel. 

I chirpily replied that it was a shade of orange and one of the best paint jobs I had ever seen! The Telcel sleuth didn't appreciate my stab at irony.

Banks, retailers and other service providers likewise function amid a blizzard of paperwork and procedures that point to an endemic lack of trust in Mexican society. 

Transactions that can be zipped up in minutes in the U.S. by using a credit card, which guarantees payment, get mired in Mexico's world of suspicion, questions and investigations.   

Outside of San Miguel, particularly at gas stations, our U.S. credit cards often have been rejected. Ticketmaster will not take U.S. cards for phone or internet orders. You can buy tickets via internet for the Royal Concertgebouw in Amsterdam, but not for the Auditorio Nacional in Mexico City. 

Nowhere in our travels, from Norway to the Patagonia, have we had our U.S. credit cards rejected so frequently as in Mexico—most recently two days ago at Home Depot in Queretaro. No reason given. 

Service providers sometimes will accept personal checks that then bounce when a gimlet-eyed bank clerk detects a suspicious middle initial or a curlicue on the letter "a" that doesn't quite match the one on record. We've had a dozen checks bounced but never for lack of funds. 

A simple retail transaction can turn into an intricate tango. To buy a spool of thread at the Parisina fabric store you first ask a floor clerk who takes you to another clerk behind the counter who shows you the item in question. 

If that's what you want, she'll write a sales slip that someone walks to a cashier, perched behind a tall glass booth looking down on the sales floor. After you go pay the cashier, and have your receipt duly rubber-stamped—whomp!—you present it at a third counter where someone fetches the item you're looking for.   

I've never met the owner of Parisina, a nationwide chain, but I sense the dude doesn't much trust either his customers or his employees.  

Phone orders involve a different rigamarole. Vendors won't accept a credit card number but instead give you the name of their bank and their account number. 

You march over to the local branch of the bank and deposit the money in the vendor's account. You then go home to scan or take a picture of the receipt that you email to the vendor, who will verify the deposit. 

If it's all good you get a tracking number that you use to check when the merchandise arrives. Ah, but you better remember to bring not one but two photo id's, in our case a drivers license and our passport to pick up the parcel.     

Granted, distrust in Mexico is not mere paranoia. The country is riddled with corruption, from the highest levels of government down to local store owners trying to cut a few corners on their taxes. Vendors will unspool tales of shoplifting, check-kiting and worse. You just can't trust anyone, they say. 

The cost to Mexico's economy of this climate of distrust would be hard to calculate but I'm sure it's enormous, starting with the cost of reams of paper, photocopiers and personnel to handle the process.

On a more macro scale, this distrust-driven inefficiency no doubt retards the growth of the economy, particularly the retail and internet commerce sectors. 

If too loosey-goosey credit, and outright fraud, drove the American economy almost over the cliff in 2008, the opposite keeps the Mexican economy from growing. Here, distrust is choking the goose of a consumer economy honking to lay golden eggs. 

By the way, we did get an Interbank ATM card—three months after submitting our application and signing an agreement twenty-eight (28) pages long, full of incomprehensible whereases, conditions and codicils, in tiny type.  

Stew and I might have donated our kidneys to the bank for all we know. 

-30-


7 comments:

  1. Don't you have an account at a Mexican bank? I had an account at Banamex, and now have accounts at both HSBC/Mexico and Bancomer. Bancomer is the best by far. After opening an account and waiting a few weeks, and maintaining a fairly low balance -- I forget how much -- they will hand you a credit card in a nanosecond. Banamex and HSBC are far more ornery with credit cards.

    Bancomer is great, however. Having at least one credit card from a Mexican bank, plus the debit card that automatically comes with it, simplifies life here significantly. I no longer have Gringo credit cards, thanks to FATCA, but I have a credit card from both Bancomer and HSBC, both of which are always trying to get me to come in and pick up their snazzier gold card, but I'm content with the lower-level card they gave me at the get-go. And I have debit cards from both.

    As for trust, no Mexican worth his salt trusts other Mexicans.

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  2. Felipe: One correction: The mutation of Intercam is Interbanco, not Interbank, and it is a Mexican bank. So we have a Mexican bank; not a very accommodating one, but a Mexican bank nevertheless.

    When we came to Mexico we tried to get an account and a credit card at Banamex, thinking that having been long-term customers of CitiBank—which owns Banamex—would grease the transaction. No way. The only thing they would give us is a credit card with a limit no higher than the balance on our savings account, in other words, no really a credit card. Although we pay our balances in full every month, the interest rates in Mexican credit cards at the time were pretty horrific, beyond usury. Maybe they've changed.

    We don't keep a lot of money at Interbanco because of the volatility of peso-denominated accounts.

    So for the time being we have a Visa from Liverpool that was approved almost accidentally when we bought a bunch of appliances, but which has only a $400 peso limit.

    I don't know why Mexican banks treat you so well. Must be your equanimity and sunny disposition, lol.

    Thanks for your comment Felipe.

    al

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    1. I was referring to one of the major Mexican banks. Interbanco is not one. I've never even heard of it. As for Banamex, they are not very accommodating with credit cards. Bancomer is the best. As for your long-term relationship with Citibank, Banamex could not care less, even though it is owned by Citibank. Mexican madness.

      Your first Mexican credit card will have a low limit, and I understand that. Mine did too. Mexican banks apparently have no connection to your credit history in the U.S. so you're an unknown risk. But as you use it, and pay it in a timely manner, they will increase that limit, often significantly. It takes time, a year or two. If you pay the balance in full every month, the interest rate is moot. You pay no interest. It's even possible to have the entire balance taken from your account automatically so you don't have to do anything at all. Quite convenient.

      Social Security and lots of corporate pensions too (not all) will easily deposit directly into a Mexican account. The exchange rate currently works to our favor. I don't understand what you mean by volatility of peso-dominated accounts. What you have in an account in pesos does not change once it's in pesos. And whatever you buy down here is in pesos. If the exchange rate favors us, we pay less in bucks. If it doesn't we pay more in bucks. But we always pay in pesos. No way around that.

      Both my SS and my Hearst pension land in my Bancomer account every month, switching to pesos along the way. Works great.

      And I have credit and debit cards with both Bancomer and HSBC. I rarely use credit cards anywhere but online. In physical life, I pay with cash and debit cards. Actually, FATCA ended up being a blessing in disguise because I want to separate myself from the U.S. financial system as far as possible. I just did not know it till it was forced upon me.

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  3. If you have not been transferring as many dollars as possible into a Mexican peso account -- and surely you have not -- you've missed a golden opportunity over the past few years due to the exchange rate that has been colossally in our favor. It's still in our favor, just not quite as good as it has been. You need to look into getting a new financial advisor.

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  4. OK, Felipe, Stew and I have meditated over your comments and we will apply for a Bancomer credit card to see how that goes. The problem last time was not the low credit limit but that Banamex wanted me to keep a balance, paying no interest, equal to their line of "credit" on the card, which didn't work for me. And the terms were horrific as far as late payments and so on.

    We'll see what happens.

    al

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    1. Before asking for a Bancomer credit card, you have to open a Bancomer account. Then you have to wait a few months (three, I think) with a minimum balance in that account. I forget what that amount is, but it's not exorbitant in the slightest. Your experience with Banamex is not surprising. Banamex and I got along fine for years, but then the relationship went south fast. Never again.

      Bancomer, however, is great. There is an annual charge on their credit card. I think it's 600 pesos, but the convenience is worth it. And if it's a joint account, the secondary account holder gets his own card with different card number with no additional annual fee. As for late payments, just don't do that. You can sign up to have the monthly amount paid automatically from your account either in full, as I do it to avoid interest, or the minimum required payment. That involves interest, however.

      If you're gonna live here, and it appears you are, having Mexican credit cards and debit cards is, in my opinion, one of those no-brainers.

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    2. One more thing. You've mentioned that you don't keep much money down here due to the "volatility of peso-dominated accounts." Investment accounts can be volatile in Mexico or anywhere. Checking and savings account at Mexican banks are not volatile.

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