TECHNOLOGY & TRUST: ARGENTINA The recent history of the Argentinian economy is a great source of frustration for those who depend on it. The biggest Spanish-speaking country in the world is blessed with natural resources, a large population and neighbouring trade partners that are mostly friendly – at least off the football pitch. Despite that, Argentina has consistently failed to enjoy sustained, reliable economic growth, and it has proven slow at adopting the kind of tech-led innovations that have transformed the movement of money in different regions. Argentina’s money struggles were famously defined by the Nobel prize-winning economist Simon Kuznets, who said that there were ‘four types of countries: the developed, the under-developed, Japan and Argentina’. In fact, this is an assertion so popular it came to be known as the ‘Argentine Paradox’, reflecting the fact that Argentina has failed to secure long-term prosperity, despite having every reason to have done so (unlike Japan, which has remained prosperous, despite a load of factors counting against it).
The country’s economy has been viewed with scepticism by the international banking community for decades. Since joining the International Monetary Fund (IMF) in 1956, Argentina has taken on 21 separate lending plans, and $56billion of debt ($44 billion of which, the largest loan in the Fund’s history, was sourced under Argentina’s previous president, Mauricio Macri). These massive intranational lending sprees were prompted by the South American nation’s declining GDP, and the unpalatability of lending to it in the eyes of many international bankers. In the words of Christine Lagarde, former head of the IMF, ‘we were the only game in town. There was nobody else, at the time, to invest in the recovery process… and, given the size of the challenge, we had to go big’. The size of these loans has caused knock-on problems for the flow of money throughout the Argentinian economy. Difficulty paying them back has led its government to start printing money, fuelling inflation rates that have topped 50 per cent per year. This has, in turn, led to capital controls on the purchase of US
dollars in Argentina, a rising black-market dollar cost and price controls on more than 1,400 household items. Unsurprisingly, these factors have made doing business in Argentina rather difficult. The proliferation of issues hasn’t stopped at the national level, either. For smaller businesses, local merchants and their customers, the COVID-19 pandemic has seen an enormous rise in fraud and identity theft. According to Roberto Dumerauf, CEO of CAME Pagos, a payments platform and digital ecosystem established by CAME, a confederation of Argentinian small and medium-sized businesses (SMEs), ‘fraud has exploded quite brutally during the pandemic. Identity theft and fraud attempts multiplied tenfold’. This has made Argentina a tricky market for interested acquiring banks to enter, as a market with a heavy reliance on cash and major issues around fraud and trust.
The COVID catalyst The last few years have seen something of a transformation in this space. “In 2020 in Argentina, the number of virtual wallet users, or, more generally, the users of online payment tools, literally
Roberto Dumerauf of CAME Pagos and ACI Worldwide’s Sonia Gomez consider how payment tech is putting Argentinian business back on the road to success 14
ThePaytechMagazine | Issue 10
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