When entering Mexico, you are allowed to bring up to $300 US, or the equivalent in other currencies, in cash. For anything more you are supposed to pay a duty (although no one can tell me how much!). It is a bit confusing on the customs form because there is a separate question that asks if you have more than $10,000 cash.
In Cancun, the US dollar is widely accepted. However, most prices are quoted in Mexican pesos. This can lead to sticker shock when you see a restaurant main course for $35.00. Usually, any price that has a decimal sign is in pesos. Pesos can also be indicated by a price like "N$35". The N stands for "new pesos".
If you see a bill with a high value, in the thousands or millions, that is "old pesos" and you have to chop three zeros from the number to get the true value. I thought someone gave me 20,000 pesos change by mistake but alas, it was only worth 20.
If no exchange rate is posted, the usual rate is 8 pesos / US dollar. Any posted rate will be lower than this. There are money exchange places all over the place; those in the hotels or right next to them give worse rates than those downtown. While I was there, the top rate was approximately 7.82 pesos / US dollar. If you desperately need some pesos, change $5 at the closest place and use 3 pesos to take a bus downtown where you can change the rest.
To keep from getting confused by prices quoted in unfamiliar currency at an unsteady exchange rate, use this reference table to see what the approximate price is based on the number of pesos and the exchange rate in effect.
Currencies other than the US dollar are at a disadvantage. Although the US dollar is exchanged at a rate close to the "official" rate used by world currency markets, some other currencies are exchanged at rates lower than you might expect.
Here are the rates posted at one exchange place during my stay:
|Currency||Pesos per unit of currency|
|Canadian||5.20 (my credit card exchange rate was 10% better)|
You can compare these rates to the official ones at the Universal Currency ConverterTM to see how they stack up. If you find, as I did with the Canadian dollar, that the rate in Cancun is worse than for the American dollar, you may find it cost-effective to change your money into US dollars before leaving home, and then spend those dollars or turn them into pesos in Cancun.
Before you go, check with your credit card company to get their exchange rate for Mexican pesos. You may find that plastic is more economical than cash for some purchases. However, small stores might charge an extra 10% for credit card sales, so you will need some cash.
If you charge something on a credit card, the charge may be in pesos or in US dollars, depending upon the store. (Everything I charged in Cancun was billed in pesos.) The credit card company converts the charge at their going rate -- in my case 5.7 pesos / Canadian dollar, significantly better than the 5.2 exchange rate offered for cash.
The same applies to cash advances and ATM withdrawals, you typically get them in pesos.
Major ATM cards work at ATMs at the big banks such as Banamex (on Avenida Tulum, right side as you come from the hotel zone, just past the plaza marked "San Franciso de Asis"). In my experience, these cards didn't work at the ATMs found in some small money exchange places.
If you don't know the PIN number for your credit card, you can still get a cash advance at a major bank like Banamex. You will need the same documents as you need to enter the country -- either a passport, or a birth certificate and driver's license. At the Banamex location mentioned above, cash advances are handled at the farthest door on the right. (It is confusing if you go in the wrong door because it is very crowded and the signs are in Spanish only.) Banks advertised their closing hour as 5 PM during the week.