Latin America and the Caribbean (LAC) are among the top recipients of remittance flows globally. According to the Inter-American Development Bank (IDB), the region received a record-breaking $161 billion in remittances in 2024. The breakdown by subregion is as follows: Mexico accounted for 40.5% of the total, Central America 28.4%, South America 19.7%, and the Caribbean 11.4%.

Remittances in LAC mainly from the income of migrants living abroad, especially in the US and Spain. Traditional remittance systems face high fees, slow or cumbersome settlement, regulatory hurdles, and limited digital uptake. Every country in LAC has their own remittance infrastructure and pain points by region: Central America, South America, and the Caribbean. 

Sending money across borders shouldn’t be expensive, slow, or complicated. That’s where Capa comes in. We are rethinking the way remittances are managed. Our financial infrastructure is based on fast rails, on/off-ramp liquidity, local payout partners, integrated KYB/KYC, and reconciliation tools that can positively improve cost, speed, and scalability of remittances in these corridors.

According to IDB, these are the top five countries in the region that received the highest remittance volumes in dollars in 2024.

1. Mexico: $65.2 billion.

2. Guatemala: $21.5 billion.

3. Colombia: $11.8 billion.

4. Dominican Republic: $10.7 billion.

5. Honduras: $9.7 billion.

Relevant Facts

• Year after year, Mexico continues to be the top recipient of remittances in LAC, receiving over 40% of the region’s total inflows.

• Between July 2024 and March 2025, 97% of the remittances received in Mexico came from the United States, according to Mexico’s Central Bank.

• In 2023, Mexico represented approximately 7.5% of global remittance flows, making it the world’s second-largest recipient after India.

• When measured as a share of GDP, Nicaragua has the highest amount of remittances accounting for 27% of its economy, followed by Honduras at 25.9% and El Salvador at 23.5%.

Common Pain Points

Even though each country in Latin America is different, there are some shared struggles when it comes to remittances:

• Some corridors are still expensive: In smaller or less competitive corridors, fees are high. That’s often because transfers pass through multiple middlemen and involve costly currency exchanges due to limited access to USD.

• Transfers can be slow and complicated: A single remittance might travel through 3 to 5 different banks or service providers before it reaches the recipient. That results in delays, especially if banks only operate during business hours or if there are manual compliance checks along the way.

• Regulation adds friction: To prevent fraud and money laundering, remittance companies must comply with strict rules in both the sending and receiving countries. That includes verifying users’ identities (KYC), flagging large transactions, and navigating different licenses for each country. For migrants without formal IDs or proof of address, this can make the process harder and more expensive.

• Cash is still king for most recipients: Many people in the region don’t have a bank account, especially in rural areas. In countries like Mexico and Guatemala, 70–80% of remittances are still picked up in cash. That limits the potential for digital solutions and financial inclusion.

• Currency issues eat into value: If someone receives dollars and has to convert them immediately, they might lose money to poor exchange rates or inflation. It’s also tough for providers to keep enough local currency on hand to fulfill payouts.

• Lack of clarity = distrust: Senders often don’t know exactly how much will arrive, when it will arrive, or what fees will be deducted along the way. Hidden exchange rate markups and vague delivery timelines erode trust in the system.

• It’s tough for providers behind the scenes: Traditional money transfer companies depend on massive agent networks, which are costly to maintain. Banks are slowed down by outdated systems and complex correspondent banking chains. And while newer fintechs are more efficient, they often lack brand trust and still depend on the same cash-based payout networks to reach end users.

Mexico & Central America: big volumes, bigger challenges…

Mexico and its Central American neighbors share strong ties to the US, which is where most of their remittances come from. Thanks to stiff competition among banks, money transfer operators, and fintechs, sending money to Mexico is relatively affordable (3–5% fees) and fast, most transfers arrive within minutes. Still, about 75% of recipients collect their money in cash, especially in rural areas where bank access is limited. Guatemala, El Salvador, and Honduras are deeply reliant on remittances. Most of this money is sent from the US through Western Union and MoneyGram. The costs are still high for smaller transfers, often 6% which adds up to hundreds of millions lost in fees each year. El Salvador’s 2021 adoption of Bitcoin as legal tender was an attempt to disrupt this status quo. While it hasn’t yet dramatically shifted remittances, it underscores the demand for cheaper digital alternatives in the region.

Despite being high-volume and relatively low-cost compared to other global corridors, remittances to Mexico and Central America still face major hurdles… 

• Fragmented payout networks (banks, retail stores, fintech wallets) mean senders must pick specific delivery methods, and interoperability is limited. 

• Rural recipients face travel burdens, and safety concerns carrying cash. Compliance checks (e.g. US Patriot Act, local AML laws) can cause delays or rejections, especially for undocumented senders. 

• Each additional intermediary from US correspondents down to local sub-agents, adds cost and complexity. 

• In places like Guatemala, even a 5% fee means nearly $900M lost annually. There’s a clear need to digitize and streamline the system.

South America: mixed flows and realities

Unlike the US - Central America corridor, money here has multi-stop journeys which adds costs, delays, and compliance risks.

• Legacy banking systems slow things down, many remittances in the region still go through traditional banks, but closed infrastructure, and heavy regulation make it hard for them to deliver fast, affordable services.

• Shrinking correspondent networks drive up costs. Global banks are pulling out of "high-risk" markets, leaving fewer options for cross-border transfers. This leads to longer wait times and higher fees, especially in smaller or niche corridors.

• Currency instability reduces real value. In countries like Argentina and Venezuela, high inflation and unstable currencies mean recipients can lose value if they can't quickly convert their remittances into something more stable.

Colombia´s remittances are growing fast. The US is the top sender, but Spain and even Venezuela play a role. With a strong banking system and high mobile use, over half of the money goes directly into bank accounts or wallets. But rural regions still depend on cash. Ecuador being a dollarized economy helps simplify US transfers, but converting euros or other currencies still adds fees. Regulation is strict, which can limit newer players from entering the market. Brazil, Argentina, and Chile see low remittance inflows compared to the rest of LATAM. Both Chile and Argentina are now net senders, hosting large immigrant populations from countries like Venezuela, Peru, Paraguay, and Bolivia. These countries have well-developed financial systems, so most inbound remittances are received through bank accounts or digital platforms like Wise and Western Union’s app, with fees averaging 5 - 7%. However, policy and currency controls create significant challenges. In Argentina, strict foreign exchange regulations and unfavorable official rates lead many to bypass banks in favor of crypto or cash to access better rates. Brazil requires documentation for large inflows and may apply taxes.

The Caribbean: small countries, big dependencies

The Dominican Republic is a high volume, moderate dependency country. Remittances are about 9% of Dominican GDP. Most money comes from the US and Spain. The system is fairly efficient, with growing use of bank transfers and wallets, but rural areas still rely on cash pickups. 

We approach these challenges with a Stablecoin-based remittance infrastructure. By leveraging blockchain rails and a network of local partners, Capa’s platform addresses the pain points at scale:

• Faster and cheaper transactions: Instead of sending money through 3–5 intermediaries like banks and money transfer operators, Capa uses stablecoins to move funds directly on the blockchain. That means lower costs (sometimes just a few cents) and near-instant delivery. Money sent from New York can land in the Dominican Republic in minutes, even on weekends or holidays. For families waiting on money, this speed makes a real difference.

• Built-In compliance: Designed to handle the tricky regulatory side of remittances. It has built-in tools for KYC (Know Your Customer) and KYB (Know Your Business), helping verify users and partners quickly and securely. Users can scan an ID or complete biometric checks with a phone. This means fintechs, banks, and even small local agents don’t have to build their own compliance systems, we handle it for them.

• Real-time tracking and reconciliation: Every transaction on the platform is fully traceable, from sender to recipient. Operators can track and confirm they were paid out correctly, and catch any issues right away. This cuts down on back-office work and builds trust and reliability for remittance companies and end users. 

• Scalable infrastructure: A company can use the full platform or just plug in the pieces they need: crypto liquidity, compliance, or payout tools. When a new partner joins in one country, they instantly connect to all other parts of the network.

What does this mean for the region…

• Slashes transaction costs and times by replacing multi-hop, fee-laden routes with direct blockchain transfers.

• Ensures last-mile delivery via local partners and ample liquidity, so recipients get their local currency quickly and at fair rates.

• Harmonizes compliance and provides ready-made tools for KYC/AML, reducing the regulatory friction that has long plagued cross-border payments.

• Improves reliability and transparency with end-to-end tracking and visualisation, building trust in the system for users, businesses, and regulators alike.

• Scales easily across countries and corridors thanks to its modular design – meaning solutions in one region can be rapidly extended to others, a crucial factor for broad impact in Latin America’s diverse remittance landscape.

Capa offers a breakthrough in how money moves across borders. Migrants are able to send money home for a fraction of the usual cost—and their families can receive it in minutes. For major remittance markets like Mexico and the Dominican Republic, this kind of upgrade means more money in people’s pockets, better access to financial services, and stronger economic stability. The bigger vision is clear: a remittance system that’s faster, fairer, and built for the realities of life in Latin America but grounded in local realities.