BajaNomad

Shocked at Costco

bajajudy - 11-14-2010 at 04:42 PM

We are just back from a trip to Costco where we found out that you can only use US dollars for $100 of your purchase. We had to put the rest on our credit card which made the prices higher. There was a sign stating this but we couldnt believe that it was true.
There was also a sign at Home Depot stating the same rule.
How in the world does the Mexican government expect our economy to recover if tourists cannot spend dollars? What kind of business plan includes not taking your customers' money?
If this is old news......sorry!

DianaT - 11-14-2010 at 04:45 PM

Just curious as to why you were using dollars instead of pesos?

Bajahowodd - 11-14-2010 at 04:51 PM

There's a number of influencing factors involved. Obviously, the Mexican government is hellbent to prevent money laundering by the cartels. Then, there's the growing reality that the dollar is just not what it used to be. Given that we don't expect merchants in the US to accept foreign currency in payment at check out, what's the big deal about using pesos to shop? I, for one don't have a problem with this. If I travel to Rome or Athens, I absolutely do not expect to be able to use dollars in shops and restaurants.

The overriding factor is about the strength of the local currency. I recall a number of years ago haggling with a merchant in Istanbul. At the time, the Turkish Lira has just been through an awful period of devaluation, and the merchants were eager to get paid in a currency of greater stability.

Barry A. - 11-14-2010 at 05:18 PM

It has never occurred to me to use anything but Pesos when in Mexico--------I am amazed that folks would be using USA dollars there.

-----but that is just me.!?!?!?!?!? :o

Barry

bajajudy - 11-14-2010 at 05:19 PM

We get paid in dollars. The economy here in Los Cabos depends on dollars.

If I were in Rome or Athens, I would not have been surprised that they didnt want my dollars.
edit to add...but I bet that there is not a law that says they cannot take my dollars and that there are probably some places that would take them

And the dollar is weaker than it had been in years against the peso.

I don't have a problem with using pesos and when people pay us in pesos, we use them eagerly.

[Edited on 11-15-2010 by bajajudy]

mcfez - 11-14-2010 at 05:27 PM

Mex Govt is trying to damper money laundering by the cartels. ....take away their cash buying power...good step.

ricewhite - 11-14-2010 at 05:29 PM

It's been all over the news here in the US lately. Mexico passed a new law in October limiting the amount of US dollars that can be accepted. The limit is $100 for any purchase at one time, and $1500 per month if you're there for a longer period of time. The purpose is to clamp down on money laundering by the drug cartels, most of which is done in US dollars. Use your debit card at cash machines instead and get pesos. You can get a cash machine card that does not charge an international fee -- I have one through Fidelity that is connected to a checking account with them, also a no-fee account. We don't accept pesos in the US or Canada, it's reasonable they wouldn't accept dollars, even though they used to.
Cathryn

Dollars

C-Urchin - 11-14-2010 at 05:41 PM

Quote:
Originally posted by bajajudy

If I were in Rome or Athens, I would not have been surprised that they didnt want my dollars.
edit to add...but I bet that there is not a law that says they cannot take my dollars and that there are probably some places that would take them

[Edited on 11-15-2010 by bajajudy]


No one cares about dollars anymore. That time has gone...

DianaT - 11-14-2010 at 06:14 PM

Quote:
Originally posted by bajajudy
We get paid in dollars. The economy here in Los Cabos depends on dollars.

If I were in Rome or Athens, I would not have been surprised that they didnt want my dollars.
edit to add...but I bet that there is not a law that says they cannot take my dollars and that there are probably some places that would take them

And the dollar is weaker than it had been in years against the peso.

I don't have a problem with using pesos and when people pay us in pesos, we use them eagerly.

[Edited on 11-15-2010 by bajajudy]


That makes sense---you get paid in dollars, that is what you spend---slapping myself on side of head now as I did not think about that. :biggrin:

Since using your dollars is getting more and more difficult, even with the banks, let's hope more people will pay you in pesos. :yes:

[Edited on 11-15-2010 by DianaT]

DianaT - 11-14-2010 at 06:17 PM

Quote:
Originally posted by ricewhite
We don't accept pesos in the US or Canada, it's reasonable they wouldn't accept dollars, even though they used to.
Cathryn


In Calexico, California one can spend pesos anywhere, including at the Wal-Mart and large grocery stores. Made it easy when we lived there---return from Mexico and no need to exchange back to dollars. :biggrin:

rts551 - 11-14-2010 at 06:48 PM

If you are making the dollars in Mexico from a legitimate business...Why not deposit them in the bank and then spend pesos.

mcfez - 11-14-2010 at 07:04 PM

Quote:
Originally posted by DianaT
Quote:
Originally posted by ricewhite
We don't accept pesos in the US or Canada, it's reasonable they wouldn't accept dollars, even though they used to.
Cathryn


In Calexico, California one can spend pesos anywhere, including at the Wal-Mart and large grocery stores. Made it easy when we lived there---return from Mexico and no need to exchange back to dollars. :biggrin:


I didnt know that! Been going thru there for ten years :-(

Asuncion shari.......you folks taking USD?

BajaBruno - 11-14-2010 at 10:06 PM

It's hard to believe this law would affect the cartels. If they want to convert dollars, they would just set up a bunch of casa de cambios and launder the dollars through them. Or, extort a bank manager to convert the dollars on the side, or fly a load of dollars to Guatemala or Belize to convert them there.

This does nothing but inconvenience casual tourists and residents like Judy.

lizard lips - 11-14-2010 at 11:32 PM

I use dollars at Cosco here in Ensenada. They give you current rate of exchange.

sanquintinsince73 - 11-15-2010 at 01:18 AM

If China has it's way we are all going to be using the Chinese Yuan soon.

bajabound2005 - 11-15-2010 at 07:18 AM

Quote:
Originally posted by rts551
If you are making the dollars in Mexico from a legitimate business...Why not deposit them in the bank and then spend pesos.


I believe that dollar deposits are also limited by the new law.

shari - 11-15-2010 at 07:55 AM

Yes, we accept dollars here but as stated above, we can only deposit about $1,200 a month in one account...then anything above that we pay a 3% tax on the dollar deposits...a royal pain. But we use the $ to buy things we need from the states.

Eli - 11-15-2010 at 08:07 AM

I am with Judy, this is an inconvenience to those who deal in the tourist trade, we are very close to the U.S. and our clients come down here expecting to use their dollars, just because they always have. Even with reflection given to the fact that one can not just go into a store in California with pesos and expect them to be received.
I will be going home in a couple of weeks and I am curious how this affects the Cafe next to my gallery. The owner has always appreciated receiving the Dollar as the principal importer that she buys the bulk of her groceries from works in Dollars. So, I am wondering how that is working now. I receive a minimal amount of Dollars in the gallery and have always been able to trade them with her or other sources, it will be interesting to see the changes affected this year.
So Judy, I was wondering, do you buy most of your books from the States? If so, do you use a Mexican Dollar bank account to do your buying or how does that work?
I agree that this will have little affect if any on The Cartels, they will find a way, they always do.
Sara

bajajudy - 11-15-2010 at 11:46 AM

Eli, Yes we buy 95% of our books from the states and we keep an account open in the states for that. Here we have both. (of course yesterday was Sunday and today is a bank holiday so making a deposit was not an option)
I have since heard that the restaurants here are making a copy of your passport if you want to pay your bill in dollars and it is over $100. Who brings their passport to dinner?!?!?!?!
I have also heard that some of the golf courses are not taking dollars at all.

BTW another Costco alert..............they were out of toilet paper

Eli - 11-15-2010 at 12:01 PM

No T. P. , now we know things are going down hill, that's just ridiculous!

Bob and Susan - 11-15-2010 at 12:12 PM

why would this hurt the tourist business???

just accept dollars and deposit them

if you deposit over $1200 then you pay a fee of 3%
it's the cost of doing business

kinda like taking credit cards 3%

costco and home depot was a good deal
as they gave you bank rates of exchange
but no more

Eli - 11-15-2010 at 01:29 PM

Bob & Susan, I can't even begin to tell You how happy I am for you that the 3% fee would not affect you economically, wow, that is awesome, you must be doing great!

ckiefer - 11-15-2010 at 01:46 PM

Some days Costco gave an even better rate of exchange than the bank across the street. If my memory is still intact, I believe that the rate of exchange when using my credit card was reasonable as well.

Some of us just enjoy the sport of finding the best deals. My father and I were always in competition with who could find the best deals at the gas pump.....but then I moved to California and all bets were off! He always wins now! :lol:

Any word on the t.p.? :o

Bajahowodd - 11-15-2010 at 02:08 PM

Quote:
Originally posted by Eli
Bob & Susan, I can't even begin to tell You how happy I am for you that the 3% fee would not affect you economically, wow, that is awesome, you must be doing great!


Two points:

First, as Judy mentioned, if the dollar, or any other currency loses sufficient exchange value, foreign businesses will be less accepting. Second, I would assume that in a capitalist, free enterprise situation, a business that encounters higher costs, will merely pass those costs on to the customer. Consider credit cards. In the states, they are almost universally accepted without a surcharge (ARCO stations would be an exception). There was a time when one couldn't use a credit card at many merchants, big and small. Now you can. It's no secret that the cost of the transactions are built into higher overall prices. That said, do they not charge a fee at places like Walmart and Costco in Mexico if you use your card?

A friend of mine was at the Mega store in San Jose earlier this year. He was buying drugs at the farmacia. When he handed them his credit card, they promptly escorted him over the a customer service desk, which was the only place in the store that could transact credit. And, there was a service charge added.

ckiefer - 11-15-2010 at 02:20 PM

Bajahowood,

Was at that same famacia on a short trip in July buying meds, used my discover card at the counter. No trip to the customer service desk. Wonder what's going on? :?:

Bajahowodd - 11-15-2010 at 02:34 PM

Haven't a clue. Just passing on what I was told.

oxxo - 11-15-2010 at 02:49 PM

Okay, two points.

Two weeks ago I was in line at San Lucas Costco behind a gringo who owns a fishing charter business on the East Cape. He bought over US$300 in groceries and wanted to pay in dollars. Costco clerk said, "no lo puedo." The gringo was insistent. Finally they had to ring up four different checks of under US$100 each and he paid for each check with dollar amounts of less than US$100 separately. I watched and waited 15 minutes while the whole scenario evolved right before my eyes. I could have moved to a different line, but this slice of drama was just too much fun to watch! Sure, you can spend more than US$100 at Costco, you just have to know how to play the game.

Point two. Costco in San Lucas restocks on Thursdays. I went there today and they were out of what I needed. I'll be back on Friday. Coconut husks are a pain in the butt! :spingrin:

Bajahowodd - 11-15-2010 at 03:11 PM

Was wondering if the decision was made by the clerk, or if management became involved. Just think that if the store had a policy, the clerk could risk being fired.

oxxo - 11-15-2010 at 03:15 PM

Quote:
Originally posted by Bajahowodd
Was wondering if the decision was made by the clerk, or if management became involved.


I know the manager at Costco - Alberto. He was not involved, but a floor manager came over and approved it.

bajajudy - 11-15-2010 at 03:54 PM

Quote:
Originally posted by oxxo


Point two. Costco in San Lucas restocks on Thursdays. I went there today and they were out of what I needed. I'll be back on Friday. Coconut husks are a pain in the butt! :spingrin:


We went to Walmart and found TP that came with a cute little can to keep the extra rolls in. We asked the cashier if they would accept over $100 in cash and she said yes.
BTW. There will be a Walmart in San Jose soon. Next to Caboley and across from the bus station,

[Edited on 11-15-2010 by bajajudy]

Bob and Susan - 11-15-2010 at 04:06 PM

walmart is marketing the new toilet paper

WITHOUT a cardboard roll inside:wow:

what else will the future bring?:wow:

Eli - 11-15-2010 at 04:09 PM

That would be just perfect for me Judy. I could take the bus in to see my friends, go shopping at the art supply store down the street, wrap her up at Walmart and hop back on the bus home, coooooooooool!

bajajudy - 11-15-2010 at 05:36 PM

Quote:
Originally posted by Bob and Susan
walmart is marketing the new toilet paper

WITHOUT a cardboard roll inside:wow:

what else will the future bring?:wow:

Did I miss something?

Pescador - 11-15-2010 at 08:43 PM

Quote:
Originally posted by rts551
If you are making the dollars in Mexico from a legitimate business...Why not deposit them in the bank and then spend pesos.


Because you can only deposit $15,000 pesos per month without being charged a tax which makes your money worth a lot less.

Eli - 11-16-2010 at 05:40 AM

Another consideration regarding the tax issue on the dollar, yep, it will be passed on to the client. In our area some of the restaurant's menu's are priced in Dollars. I think that the 3% tax would be considered in their pricing, increasing the cost for all of us whiter we use pesos or dollars. I know, No big deal, just don't eat at the restaurant. Which means less revenue for the restaurant, less jobs for locals working at that restaurant. It does affect local economy.
For me and my gallery, well, what the heck, in a week, I am very lucky I have never pulled in more than a few hundred dollars or equivalent in pesos anyway, if I did choose to deposit my income it wouldn't affect me, I just don't like to go to the bank and minimize my transactions accordingly. So, no biggie on a personal level, I just feel for the people that it does affect. they are having a hard enough time of it as it is.
Sara

Bob and Susan - 11-16-2010 at 06:44 AM

we have been "spoiled" along time...
using american dollars in mexico was a great advantage
but...
it may be over

you have to remember the mexican economy
IS NOT entirely based on the tourist dollar

the dollar does contribute...don't get me wrong

there are HUGE manufacturing plants
oil production
large farms
trucking
subways
tall buildings
universities
etc in mexico

i still haven't found an easy way to move dollars
to pesos but i'm working on it
bank transfers are expensive and slow

small businesses will take dollars for along time
the big businesses won't

you have to sell ALOT of hamburgers
to make AND deposit 15,000 pesos in a month
in the bank and be charged the 3%

tourists should plan on converting dollars to pesos
before they travel
it's very easy at the border

remember canadians cannot
spend "the loonie" in mexico
what do they do?

Santiago - 11-16-2010 at 08:01 AM

Quote:
Originally posted by Pescador
Quote:
Originally posted by rts551
If you are making the dollars in Mexico from a legitimate business...Why not deposit them in the bank and then spend pesos.


Because you can only deposit $15,000 pesos per month without being charged a tax which makes your money worth a lot less.


Pescy: didn't you mean $15,000 dllrs? Mexican governments can't possibly be charging a tax to deposit pesos, no matter what the amount. Right?:?:

Santiago - 11-16-2010 at 08:10 AM

Uh-ho, now I see Bob said $15,000 pesos too. Let me get this right: You have a small business that generates the equivalent of $1225 dollars per month (that's only $56/day if you're open 6 days a week) in the local currency and the government charges a tax for monthly deposits on any amount above that?

oxxo - 11-16-2010 at 08:30 AM

Quote:
Originally posted by Santiago
Uh-ho, now I see Bob said $15,000 pesos too. Let me get this right: You have a small business that generates the equivalent of $1225 dollars per month (that's only $56/day if you're open 6 days a week) in the local currency and the government charges a tax for monthly deposits on any amount above that?


My understanding is that the tax only applies if you are depositing the equivalent in US dollars. You can deposit any amount you want without a tax if it is a peso deposit.

bajalou - 11-16-2010 at 08:47 AM

I thought I read that the tax can be used as a credit against your Mexico income tax. ??

Alan - 11-16-2010 at 09:06 AM

Quote:
Originally posted by Bob and Susan
we have been "spoiled" along time...
using american dollars in mexico was a great advantage
but...
it may be over

you have to remember the mexican economy
IS NOT entirely based on the tourist dollar

the dollar does contribute...don't get me wrong

there are HUGE manufacturing plants
oil production
large farms
trucking
subways
tall buildings
universities
etc in mexico

i still haven't found an easy way to move dollars
to pesos but i'm working on it
bank transfers are expensive and slow

small businesses will take dollars for along time
the big businesses won't

you have to sell ALOT of hamburgers
to make AND deposit 15,000 pesos in a month
in the bank and be charged the 3%

tourists should plan on converting dollars to pesos
before they travel
it's very easy at the border

remember canadians cannot
spend "the loonie" in mexico
what do they do?

I guess I just don't understand what the big problem is with using pesos. It seems to me this is such a minor inconvenience when one considers the reasons for this policy change. Mexico (Calderon) is courageous enough to finally take some meaningful approaches to seizing control of the country back from the cartels.
1. They are using their military to attack the leadership
2. They are strengthening their borders to seize weapons and drug profits coming in from the US
3. and now they are trying to make it more difficult for the cartels to spend their drug profits.

If we love Baja as each of us exclaim we should be supportive of his actions and stop quibbling about such a minor inconvenience.

Additionally, and perhaps because I have become most familiar with La Paz which isn't as dependent on the tourist dollar as so many other towns in Baja I think we have become very egotistical about the importance of the US dollar to Mx. because it is so important to the relatively few places we actually frequent. Beyond the border towns and the resorts such as Cancun or Puerta Vallarta the vast majority of Mexico's population never even sees a dollar in their course of daily business.

Why is it so difficult to simply leave your dollars at home and get pesos from the abundant ATM's?

David K - 11-16-2010 at 09:20 AM

Good point Alan... It might be good to change dollars into pesos for protection as well for those who travel frequently to Mexico... as the dollar slips into the toilet because of what is going on (printing dollars lowers their value).

Riom - 11-16-2010 at 10:58 AM

Quote:
Originally posted by bajalou
I thought I read that the tax can be used as a credit against your Mexico income tax. ??


Yes, the IDE deposit tax is an advance tax (in case the government doesn't get anything else). It can be deducted from future corporation tax bills:

PKF Mexico Tax Guide 2010

So it's not an extra cost for a business (it's a prepayment for tax that would be due eventually anyway), although it does affect cashflow a bit.

Rob

karenintx - 11-16-2010 at 11:04 AM

Quote:
Originally posted by morgaine7
"Owing to new banking regulations, cash payments over $xx.xx must be in Mexican currency"?

Kate


OR...a sign that reads:

"Cash payments over $xx.xx will have 3% added to the bill."

I have seen signs and been told this many times when I asked a business if they accept credit cards. It would then be left up to the consumer to make the decision.

When told I would have to pay an addtional ??%...I pull out my pesos.

.

[Edited on 11-16-2010 by karenintx]