Currency & Payment

Panama uses the US dollar (USD) as its de facto legal tender, so prices and notes are in US dollars. The national currency, the Panamanian balboa (PAB), is pegged 1:1 to the US dollar and circulates mainly as coins; there are no balboa banknotes, only US dollar bills. In practice you pay everything in US dollars.

Because Panama uses the US dollar, travellers coming from the US or other dollar regions do not need to exchange money at all. If you arrive with another currency, change it at exchange bureaus (casas de cambio) or banks in major cities such as Panama City, or simply withdraw US dollars from an ATM. Rates and fees vary, so compare before you exchange.

Credit cards are widely accepted in Panama City at hotels, restaurants and larger shops, with Visa and Mastercard being the main networks. In rural areas and at small businesses, cash is often preferred or the only option. Carry some US dollars in small denominations as a backup for taxis, markets and smaller places.

ATMs are plentiful in Panama City and other urban areas, run by banks such as Banco General, Banistmo and BAC. They dispense US dollars. Be alert to card skimming: use ATMs inside banks or malls where possible, and decline home-currency conversion (DCC) for a better rate. Watch out for foreign-card withdrawal fees.

Mobile payment adoption in Panama is still limited, and everyday spending relies mainly on cash and cards. Contactless card payments and phone wallets work at many modern outlets in Panama City. Local transfer apps such as Yappy are popular among residents but are generally aimed at people with a Panamanian bank account, so travellers should not rely on them.

In restaurants a tip of around 10% is customary, though some places add a service charge to the bill, so check before adding more. Tipping is generally discretionary. Small tips for hotel staff, tour guides and helpful drivers are appreciated but not obligatory. Keep small US dollar notes handy for tips.

By Central American standards Panama is mid-range to slightly pricey, and Panama City is the most expensive part of the country. Imported goods, upscale restaurants and city hotels cost more. You can save by eating local set lunches, using markets and supermarkets, and travelling outside the capital where prices tend to be lower.

Panama does not offer a broad, easy-to-use VAT refund scheme for ordinary tourists like many European countries do. The local sales tax is called ITBMS. Any refund arrangements are limited and conditional, so do not count on getting sales tax back on general shopping. If you make large or special purchases, ask the retailer about any applicable procedure.