Argentina Embraces Digital Payments Revolution

Disrupting Traditional Cash Culture

In Argentina, where cash has long been the dominant form of payment, the trend is shifting towards digital payments. Financial technology (fintech) innovations and President Javier Milei’s economic overhaul plan are transforming the way Argentines pay for goods and services.

The Rise of Digital Payments

• 312 fintech firms operated in Argentina last year, up from 72 in 2017, according to an Inter-American Development Bank report.
• MercadoLibre Inc.’s payments unit, Mercado Pago, has introduced a new function on its app for tipping at restaurants and bars.

Tipping Goes Digital

Mercado Pago’s latest update allows users and gastronomy workers to give each other their personal alias for tips. This move reflects the growing adoption of digital payments in Argentina.

President Milei’s Economic Overhaul Plan

The government is paving the way for commuters to pay for public transport with QR codes or a card, mirroring systems in place in cities like New York and London.

The Decline of Cash Payments

Despite these changes, cash remains a staple in Argentina. However, all signs suggest that the reign of peso banknotes is ending:

• Cash payments at supermarkets made up only 17% of total purchases in May, down from 36% in early 2020.
• Credit card payments have surged as Argentines take advantage of payment installments without interest to stretch out their buying power.

The Advantages of Digital Payments

Pedro Filippini, a barista at Zuka Cafe in Buenos Aires, says gratuities tend to be more generous on Mercado Pago, around 1,000 pesos, whereas cash tips come down to whatever bills a customer has on them. “If you’re out in the street without mobile data, you can’t count on Mercado Pago,” he said. “Cash will always be indispensable, but Mercado Pago has had a lot of success because it truly offers a lot of advantages.”