Argentina’s push towards a cashless economy, along with its population's high smartphone penetration, has created a fertile ground for fintech innovation. By the end of 2023, electronic payments in Argentina grew by 68% year-on-year. This surge was largely due to the implementation of interoperable QR codes and real-time payment systems (RTPs), such as Transfers 3.0, which have made digital transactions more accessible to the masses. The ecommerce sector also saw substantial growth, accounting for an estimated USD 26.7 billion in transaction volume in 2023, with projections that this will continue growing at a 17% CAGR until 2027, according to PCMI E-commerce Data Library. Below we will dive deeper to understand Argentina’s success in terms of financial technology.
Argentina's payments industry is shaped by a confluence of economic challenges, technological advancements, and shifting consumer behaviours. The following trends illustrate the major forces that are driving change:
1. Inflation’s impact on payment behaviours
Argentina's hyperinflation has compelled consumers to seek credit-based payment solutions to preserve purchasing power. Buy Now, Pay Later (BNPL) has emerged as a popular option, allowing consumers to lock in prices without an immediate financial outlay. In 2023, BNPL accounted for USD 282 million in ecommerce transaction value, representing 1% of total online sales for the first time, according to Worldpay 2024 data. This trend indicates a growing reliance on alternative credit solutions as consumers navigate economic uncertainty.
2. Growth of digital wallets
Digital wallets have gained significant traction in Argentina, accounting for 31% of the country’s ecommerce value and 18% of its POS transactions in 2023. The convenience, security, and speed offered by digital wallets like Mercado Pago and MODO have made them increasingly popular among consumers. Projections indicate that digital wallets will become the leading payment method in ecommerce by 2024 and in physical stores by 2027.
3. Instant payments via MODO
RTP solutions like MODO, developed by a consortium of over 30 banks, have seen widespread adoption. Merchants are particularly eager for immediate access to funds, and consumers appreciate the convenience and speed of instant payments. Inflation has played a key role in accelerating the adoption of instant payments, as both consumers and businesses seek to minimise the time their money is tied up in transactions.
4. Government initiatives for financial inclusion
The Argentine government has implemented policies that aim to promote financial inclusion and reduce reliance on cash. Initiatives like Transfers 3.0 and the support for digital wallets, such as Cuenta DNI and BNA+, are part of a broader strategy to integrate more citizens into the formal financial system.
The country’s payment ecosystem is underpinned by a robust technology stack, designed to provide secure, real-time, and cost-effective solutions for consumers and businesses.
Transfers 3.0, launched by the Central Bank of Argentina (BCRA) in 2021, has revolutionised the payments landscape by introducing an open, interoperable RTP network. This system allows users to make payments by scanning a QR code with any mobile app or digital wallet, fostering interoperability and convenience. RTPs now account for 36.6% of all transactions in Argentina, with the figure expected to grow at a CAGR of 24.4% from 2023 to 2028, according to ACI Worldwide.
The inflationary environment has driven increased adoption of BNPL solutions. These services allow consumers to spread payments over time without incurring interest, making larger purchases more manageable. According to Worldpay, BNPL accounted for 1% of ecommerce value in 2023, and its popularity is expected to rise, as consumers continue to seek ways to mitigate the impact of inflation on their purchasing power.
The surge in smartphone usage has propelled the adoption of digital wallets. Services like Mercado Pago, MODO, and Ualá offer seamless payment experiences, integrating features such as bill payments, peer-to-peer (P2P) transfers, and investment options. By the end of 2023, 100% of Argentinians had access to savings accounts, particularly through digital wallets, as a primary method of transacting both online and at physical POS.
The adoption of interoperable QR codes has been a game-changer in Argentina's payments landscape. Consumers can use any digital wallet to scan QR codes from any provider, simplifying the payment process and encouraging wider acceptance among merchants.
Argentina's payments ecosystem is dominated by several key players, each offering unique solutions tailored to the needs of consumers and merchants.
Mercado Pago: as the payment arm of Mercado Libre, Latin America's leading ecommerce marketplace, Mercado Pago holds a dominant position in Argentina. With 74.4% of surveyed consumers indicating it as their regularly used digital wallet, Mercado Pago offers a comprehensive suite of services, including online payments, POS solutions, and even financial services like loans and investments. Its integration with Mercado Libre provides a seamless shopping and payment experience, solidifying its position as a market leader.
MODO: backed by a consortium of over 30 public and private banks, MODO has emerged as a major player in the RTP and digital wallet space. Its platform allows for interoperability across multiple banks and payment platforms, making it a key tool for merchants and consumers seeking fast, secure payments. MODO's emphasis on security and ease of use has contributed to its growing popularity, becoming the second most regularly used wallet in Argentina (31.6% of the population).
Ualá: this fintech company offers a mobile app that provides access to a prepaid Mastercard, allowing users to make online and offline purchases, transfer money, and track expenses. Founded to promote financial inclusion, Ualá is the country’s third-most used wallet (20.6%). Its user-friendly interface and focus on serving the underbanked population have made it a significant player in Argentina’s fintech landscape.
Cuenta DNI and BNA+: these digital wallets, backed by government banks Banco Provincia (14.4%) and Banco de la Nación Argentina (12.2%) respectively, aim to drive financial inclusion by offering digital banking services to a wider audience. While they hold a smaller market share, compared to their private-sector counterparts, they play a crucial role in government strategies to promote electronic payments and reduce the informal economy.
Payment methods in Argentina are diverse, reflecting a population that is increasingly embracing digital alternatives, while still relying on traditional methods. Below is a breakdown of the most used payment methods at the POS and for e-commerce transactions in 2023:
POS payment methods, according to Worldpay 2024:
Cash: 27%
Credit cards: 25%
Debit cards: 25%
Digital wallets: 18%
POS financing: 3%
Prepaid cards: 2%
Despite the push towards digital payments, cash remains a significant payment method, particularly in rural areas and among older demographics. However, the use of digital wallets and cards is steadily increasing, signalling a shift in consumer preferences.
Ecommerce payment methods, according to PCMI’s E-commerce Data Library:
Credit cards: 39%
Digital wallets: 38%
Debit cards: 13.5%
Cash vouchers: 3.3%
Account-to-account (A2A) transfers: 2%
BNPL: 1%
Other: 3%
Online, credit cards remain the dominant payment method, but digital wallets are rapidly closing the gap. The convenience of storing payment information and the ability to transact quickly have made digital wallets an attractive option for online shoppers.
Source: PCMI analysis, 2023
Of course, it would not make much sense to discuss Argentina’s payments market without covering inflation. This has plagued the country for at least 30 years. Data from the Central Bank of Argentina indicates that in 1990, Argentina had 711 billion pesos in circulation – but by 2020, there were 2.5 trillion pesos. As such, the government nearly quadrupled the amount of money in circulation over the past three decades.
While parsing the reasons behind this inflation and Argentina’s troubled economic history are well beyond the scope of this piece, it is important to understand that price fluctuations can be abrupt in Argentina; which undoubtedly has impacted Argentine spending habits. This has extended to 2024, as Argentines are still struggling with inflation, despite the aggressive fiscal policies of recently elected president Javier Milei, which included a 50% devaluation of the peso, and substantial cuts in government spending. In fact, annual inflation remained alarmingly high at 289.4% as of April 2024.
This economic turbulence has driven many Argentinians to turn to ecommerce as a coping mechanism against the financial strain. Because of this, online shopping has surged, with ecommerce revenue increasing by 248% in H1 2024, compared to H1 2023. This shift is partly due to convenience, the often lower prices found online, and the ability to access a broader range of goods, without the added costs of physical stores. On top of this, many businesses have adapted by enhancing their online presence and offering more competitive prices to attract cost-conscious consumers.
Despite these efforts, the overall economic outlook remains challenging, with consumer spending contracting and the economy expected to shrink by 2.8% in 2024.
Argentina's ecommerce market has experienced substantial growth, propelled by increased internet access, smartphone penetration, and the adoption of digital payment methods.
While credit cards currently hold the largest share of ecommerce payments in Argentina (39%), digital wallets are expected to overtake them in the next years (at a 59% forecasted market share in 2027, compared to 25% for credit cards). The ease of use, alongside features like instant refunds and promotions, make digital wallets a preferred choice for many consumers.
Argentina’s ecommerce market is heavily shaped by mobile-first consumer behaviours, with 70% of online purchases made via mobile devices compared to 30% on desktop, according to PCMI’s 2024 E-Commerce Data Library. This trend reflects an established preference for convenience, likely driven by the increasing penetration of smartphones and a growing reliance on mobile payment solutions. Retailers looking to maximise their reach must prioritise mobile optimisation to maintain competitiveness in the local market.
According to data from the Cámara Argentina de Comercio Electrónico (CACE), the country’s chamber of ecommerce, online purchases seemingly focus on essentials and home-related goods. Food and beverages rank first in online purchases, indicating a strong reliance on digital platforms for daily needs. Coming in second place, tools and construction materials signal demand from individual consumers and small businesses alike. Home, furniture, and garden products follow closely in third place, pointing to increased home improvement activities, as consumers adjust their living environments. The importance of personal care items and white goods also suggests a sustained demand for consumer staples and large household appliances, reflecting broader consumption patterns within the market.
Among the top national and international marketplaces in Argentina, the ones with more active users (a device having one or more foreground sessions within an app during the month), according to SemRush data from August 2024, were:
According to PCMI’s 2023 E-Commerce Data Library, domestic retailers dominate the country’s ecommerce landscape, with 97% of sales stemming from local sellers. Despite this and other fiscal obstacles detailed below, cross-border ecommerce is projected to expand by 30% in 2024, indicating a growing interest in international products, which could be attributed to pricing differentials and broader product selection.
Ecommerce contributes approximately 4% to Argentina’s GDP, according to PCMI analysis. The combination of mobile-first shopping habits, essential product demand, and strong domestic platforms sets the stage for sustained market activity.
In Argentina, cross-border ecommerce is becoming increasingly significant, as local consumers turn to international platforms to access a wider range of products. In 2023, 8% of Argentina's ecommerce activity involved cross-border transactions. The sector is evolving amid economic challenges, as businesses and consumers seek alternatives to local markets, where prices are often affected by inflation and supply constraints. However, cross-border ecommerce faces a complex tax and regulatory environment that impacts sellers and buyers alike.
One of the major issues is the ‘Impuesto PAIS’, a tax imposed on foreign purchases. While this tax has recently been reduced from 17.5% to 7.5% for goods and shipping, services bought from abroad – such as hosting, marketing, and other essential services for running an online store – remain heavily taxed at rates as high as 30%. This tax significantly complicates the cost structure for businesses involved in cross-border ecommerce, particularly for small and medium enterprises (SMEs) that rely on international service providers for digital tools.
There have been some initiatives by big global players such as Amazon to facilitate cross-border commerce and bypass these obstacles, like the ‘Tarifa Plana’ (Flat Rate). A broad range of products, from electronics to books, can be purchased on Amazon with a flat-rate shipping fee of USD 5, creating high interest among local shoppers. The initiative covers a wide selection of items and aims to reduce previously prohibitive shipping costs for low-value purchases. However, while the flat-rate fee is appealing, Argentinian consumers must consider factors like import taxes, exchange rates, and payment methods, which can significantly affect the final cost.
Argentina's regulatory environment is evolving to support the growth of digital payments and financial inclusion.
A2A transfers 3.0: BCRA's launch of Transfers 3.0 has been pivotal in promoting RTPs and interoperability, with over 455 million monthly transactions. The initiative has streamlined digital transactions by mandating that all payment service providers accept interoperable QR codes. Recently, this has been upgraded to include QR codes for credit card payments. Merchants displaying these must now allow customers to pay using any digital wallet, whether from a bank or a payment service provider, regardless of the brand associated with the QR code. This development significantly enhances the payment experience for both merchants and users.
Open Banking: Argentina's approach to Open Banking is unique and gradual, focusing on financial inclusion and modernisation of electronic payments, rather than implementing a comprehensive regulatory framework. The migration towards pull transfers reflects the BCRA's commitment to the security and efficiency of financial transactions. Pull transfers allow for more secure and efficient debiting of funds from a payer's account, enhancing the overall transaction process. Despite these advancements, Argentina's implementation of Open Banking remains fragmented, characterised by individual regulations and specific measures, not by a unified, comprehensive strategy. This contrasts with other countries in the region, such as Brazil, which have developed coordinated Open Banking programmes. The lack of a cohesive regulatory framework raises questions about the strategic direction Open Banking should take in Argentina and why a comprehensive programme has yet to be established.
Argentina has one of the most developed payments industries in Latin America, driven by the adoption of RTP systems, digital wallets, and high digitisation. While challenges remain, particularly regarding economic stability and infrastructure, the opportunities for growth and innovation are significant. The regulatory push towards interoperability, as seen with Transferencias 3.0 and QR code standardisation, enhances the potential for a more inclusive financial ecosystem. For this to occur, collaboration between fintech companies, traditional banks, and government institutions must happen, as Argentina’s woes are not technological anymore, but political.
Luca Nacucchio is a Senior Research Analyst at PCMI with a background in economics, operations, data analysis, business development, and market research. Luca’s analysis and research gird projects serving an array of multinational companies operating in Latin America and other markets. His work focuses on alternative payment methods, open finance and real-time payments, not only providing an incisive, data-driven view of these areas but also identifying growth opportunities for payments players.
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