Cash remains the most popular payment instrument in Argentina, accounting for 80% of the country’s total payment transaction volume in 2018.

This was mainly a result of the high unbanked population, inadequate banking infrastructure, limited public awareness of electronic payments, and low merchant acceptance. However, the government has been encouraging use of payment cards by promoting payroll cards, lowering interchange fees and requiring merchants to install POS terminals. Consequently, the number of cards in circulation, the transaction volume and the transaction value recorded robust CAGRs between 2014 and 2018 – a trend that is forecast to continue in the near future.

The emergence of contactless technology and e-commerce growth are also expected to support payment card market growth. Rising investment in POS infrastructure and the advent of digital-only banks will further push electronic payments in Argentina.

Government initiatives

Debit card penetration in Argentina stood at 1.1 cards per individual in 2018. The government has been encouraging the adoption of debit cards by heavily promoting the use of payroll cards and reducing interchange fees.

All major banks now offer payroll accounts for customers. A mandatory regulation by the Banco Central de la República Argentina (BCRA) requires payroll, retirement, pension and social welfare funds to be paid into wage accounts. In addition, in 2016 the BCRA introduced guidelines for account opening and switching. Financial inclusion initiatives such as these are expected to drive banking and debit card penetration.

Credit card volumes

Credit cards are the preferred type for payments, accounting for 68.2% of the total card payment transaction value in 2018. Driving transaction volumes and values are Ahora plans, which enable cardholders to purchase products in interest-free instalments.

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In November 2018, the Argentine government extended the Ahora plan, allowing credit cardholders to pay for some products in three, six, 12 or 18 interest-free instalments. The Ahora programme was introduced in September 2014, and between its inception and the third quarter of 2018, ARS339bn ($9bn) in sales were made. The plan is currently available at more than 350,000 stores in Argentina.

E-commerce growth

Argentina is the third-largest e-commerce market in Latin America, after Brazil and Mexico. E-commerce in Argentina recorded a significant CAGR of 52.4% between 2014 and 2018, to reach $5.2bn in 2018.

Credit and debit cards accounted for 38.2% of the total e-commerce transaction value in 2018. The most important reasons cited by consumers in for using credit cards online are comfort and convenience.

Alternative payments such as Mercado Pago, Rapipago, Pago Fácil and PayPal are also used for online shopping. The availability of digital wallet services – as well as the security and convenience they offer – makes them popular.

Unbanked population

Nearly half of the Argentine adult population is unbanked, which remains the key driving factor behind prepaid card market growth.

Targeting the unbanked, payment service provider Mercado Pago launched a prepaid card in collaboration with Mastercard in February 2018. The card is offered to Mercado Pago account holders, and can be used for in-store and online payments, as well as cash withdrawals.

All major banks now offer prepaid cards in an aim to improve financial access. Santander Rio offers the rechargeable Visa River card, which can be used for cash withdrawals, and in-store and online purchases. For convenience, the card can be reloaded through online banking.

POS terminals

The number of POS terminals in Argentina recorded a healthy CAGR of 14.1%, rising from 421,691 in 2014 to 715,000 in 2018. In line with this, the card payments transaction value recorded a robust CAGR of 39.9%, while the transaction volume posted a CAGR of 11.9%.

In 2018, First Data launched its Clover Mini and Clover Flex smart terminals for Argentine SMEs, which allow barcode and QR code scanning.