While cash has traditionally been the most preferred payment method in Argentina, the COVID-19 pandemic is acting as a catalyst for the growth of electronic payments, says GlobalData. According to the leading data and analytics company, Argentina’s card payments market is set to grow at an impressive compound annual growth rate (CAGR) of 29.9% between 2021 and 2025, to reach ARS20.3 trillion ($197.7 billion) in 2025.

GlobalData’s report, ‘Argentina Cards and Payments – Opportunities and Risks to 2025’ notes that there has been an overall rise in card payments at the expense of cash. With the gradual improvement of economic conditions, card payment value registered a growth of 63.8% in 2021. The trend is expected to continue, with the total card payments reaching ARS11.0 trillion ($107.2 billion) in 2022 after registering a growth of 54.6%

Ravi Sharma, Lead Banking and Payments Analyst at GlobalData, comments: “Cash remains the most popular payment option in Argentina mainly due to the high unbanked population, limited public awareness of electronic payments, and low acceptance of payment cards at merchant outlets. However, the government has been encouraging the use of payment cards by promoting the use of payroll cards, lowering interchange fees and merchant service charges, and mandating merchants to install point-of-sale (POS) terminals. Although the pandemic has impacted consumer spending, it has also highlighted the importance of non-cash payment methods, pushing the use of card payments in the country.”

Argentina’s economy contracted in 2020, with the country’s GDP registering an annual decline of 9.9%. However, with economic activities gaining traction during 2021, GDP increased by 8.1%. The government has rolled out financial measures to soften the impact of COVID-19, with fiscal measures so far adding up to over ARS2.8 trillion ($27.3 billion) to support the economy. Improving economic activities will spur consumer spending, which in turn will support overall payment card growth.

Sharma continues: “In March 2022, the government declared that the COVID-19 virus is no longer a critical threat. Consequently, it eased restrictions for international travelers visiting Argentina, including the immediate removal of mandatory quarantines. This will support the country’s tourism sector going forward, which in turn will benefit the payments industry.”

To push card usage, the government extended the Ahora program, the credit card-based installment program, until June 30, 2022, enabling credit card holders to purchase products in three, six, 12, 18, or 24 interest-free installments. In addition to in-store purchases, the program was extended to online purchases and essential items such as medicine. From January to April 2022, 24.9 million transactions worth ARS411.7 billion ($4 billion) were made via the program.

Sharma concludes: “Increased investments in POS terminals, the introduction of instant payments, and the advent of digital-only banks will further encourage electronic payments in the country.”