Buenos Aires has a timeless feel, with its Parisian architecture in the town center, cobblestone streets and crowded cafes. But its postcard charm has at all times had an archaic counterpart: money.
One of probably the most stable bastions of money use in Argentina is tipping in restaurants and bars. Tipping with a debit card is legal as much as 15%but in practice this feature is never offered. As a result, guests – especially tourists – Bundle of banknotes for dinner, so a stack of pesos for suggestions alone is a standard sight, considering that until recently the country’s largest bill was value only 2,000 pesos (about $1.50).
But because of a boom in financial technology and a footnote in President Javier Milei’s “shock therapy” plan to repair the economy, tipping in Argentina is finally going digital.
E-commerce giant MercadoLibre Inc.’s payments division, Mercado Pago, has developed a brand new feature specifically for suggestions in its widely used app. The change reflects the combination of the fintech industry in cash-heavy Argentina. There were 312 firms within the sector last 12 months, up from 72 in 2017, in keeping with a study by the Inter-American Development Bank. report.
The app’s latest update — available only to residents of Argentina — builds on a growing, if uneven, trend of some waiters giving customers their personal Mercado Pago alias for suggestions, very like Americans use Venmo or Zelle.
“The proliferation of digital payments and the decline in cash use began to negatively impact the amount of tips waiters received,” said Agustin Onagoity, senior director of Mercado Pago Argentina, in a press release. “Our users and hospitality workers urgently requested a tipping solution.”
Meanwhile, Milei is propose a law formalize tips about credit and debit cards, while his government pave the best way for commuters who wish to pay for public transport using QR codes or a card, like in New York or London. At the kiosks in Buenos Aires’ subway stations, money continues to be required to top up a public transport ticket, but there are also options for digital top-up.
To be clear, one other form of money – the U.S. dollar – is prospering in Argentina, one in every of the world’s largest recipients of U.S. banknotes, in keeping with research by the Federal Reserve. Argentines hold billions in U.S. money outside the formal banking system, economists estimate.
Apart from the dollar, all tangible signs point to the top of the peso banknote’s reign. Cash payments in supermarkets accounted for just 17% of total purchases in May, in comparison with 36% in early 2020. Credit card payments have risen sharply as Argentines use interest-free installment payments to spice up their purchasing power in a rustic where 270% annual inflation is undermining wage growth.
Pedro Filippini, a 23-year-old barista at Zuka Cafe in Buenos Aires, lets his customers transfer tricks to his Mercado Pago account, although the cafe has a standard money register jar. Filippini says suggestions at Mercado Pago are likely to be more generous, at around 1,000 pesos, while money suggestions are limited to whatever bills a customer has on them.
While Filippini prefers digital payments, he still sees a reason for money in a rustic where half the population is barely making ends meet. With cell phone prices skyrocketing recently, he runs out of knowledge before the top of the month, so he has to depend on Wi-Fi – when possible – to access his Mercado Pago account.
“If you’re traveling without mobile data, you can’t rely on Mercado Pago,” he said. “Cash will always be essential, but Mercado Pago has been very successful because it really offers a lot of advantages.”
