January 6, 2023 – updated January 20, 2023

Aline Spating arrived in Argentina on a very hot January day and spent much of it in a very long line, slumped in the shade among tourists swigging beer from coolers. The 24-year-old German had just crossed the border from Brazil to the steamy Argentine jungle town of Puerto Iguazú, and was waiting to change a stack of US dollars into pesos at Western Union. 

It was worth the delay, she felt: fellow travelers had warned her never to pay by card in Argentina, because changing money at Western Union would give her almost twice as many pesos per dollar. The owner of her hostel even drew a concept map explaining Argentina’s economic ordeals, saying she should pay for everything in cash changed at Western Union or cuevas (caves, or illegal exchange houses). 

What Aline didn’t know was that these financial gymnastics aren’t necessary anymore.

Until recently, payments made in Argentina with foreign credit and debit cards were changed at the official dollar exchange rate, which is AR$185.75 to the dollar at the time of writing. But on November 4, Argentina’s central bank launched a preferential exchange rate for foreign tourists. 

Known as the “foreign tourist dollar”, it means payments made on foreign credit cards use the “MEP” (“Electronic Payment Market”) dollar exchange rate, which is currently AR$331.79 to the dollar. In other words, if you’re paying by card, your dollars go 78% further than before. 

Currently, the “foreign tourist dollar” only works for purchases, and not cashpoint withdrawals.

How does the “tourist dollar” work?

Mastercard joined the program on December 2 and Visa followed suit just under two weeks later, meaning payments made in Argentina through foreign credit card from those companies are now processed at the MEP dollar rate.

Mastercard confirmed to the Herald that their cards charge their users the official rate then reimburse them for the difference, while foreign Visa holders said their cards process the initial payment at the MEP dollar rate.

Lucas P.M., a 59-year-old U.S. citizen, told the Herald a purchase he made on his Mastercard was charged at the official rate (in this case, US$22), but he was automatically reimbursed for the difference (US$9.52) four days later. Three other Mastercard users told the Herald they’d had the same experience.

Lucas visits Argentina once a year, and said he would continue using his card “basically because of the convenience of it: first, because I did not bring any cash with me and, second, because I do not know any arbolitos [informal dollar sellers]”.

“Returns are identified days after the purchase, since it depends when the transaction is effectively processed,” said Federico Cofman, Mastercard’s Country Manager for Argentina and Uruguay. He added that returns were usually made within 72 hours, depending on the card issuer.

Visa cardholders told the Herald their payments had been processed at the MEP rate. Mariana (not her real name), a 26-year-old Guatemalan, used to bring US dollar bills from her home country and change them in cuevas or with friends. “I stored them under the mattress and dosed them. When I saw the blue dollar [the informal exchange rate] went up, I exchanged,” she said.

When the change came in, she made an experimental purchase to see what would happen. It went through with no problems at the preferential rate, so she will now start using her card. “The difference between the ‘tourist’ [dollar] and the blue is like 30 pesos, so it’s not that big, and it works for me because I don’t have the inconvenience of having to buy everything with cash or running out of dollars,” she said.

With Visa and Mastercard, “more than 90% of the market share” is covered, according to sources inside the central bank. “Only AMEX [American Express], which has less than 10% of the market, is still not on board”. Representatives for American Express in Argentina told the Herald that the company is going to offer the service, but cannot give a precise time frame yet. “We’re working on the implementation and the system and process adaptation, which will take a while,” they added.

What are the advantages and disadvantages?

The new rate makes the country a cheaper destination for tourists. Switching from cash to card payments could also be safer, since tourists will no longer have to take their chances with informal exchange houses and hotels will not need to handle such huge wedges of cash, sources in the tourism and hospitality sector said. 

The greatest takeup so far has been from Brazilians, followed by Europeans and visitors from the US, according to the Tourism Ministry, which views the measure as a resounding success. They think the new exchange rate will help restore tourist industry income to pre-pandemic levels, or even surpass those figures.

Cofman, the Mastercard country manager, said that foreign card transactions increased by 25% in value and 28% in volume within a week of the new rate’s implementation. At first, purchases were dominated by “typical” card purchases such as air tickets, restaurants and hospitality, he said, but holders are increasingly paying for everyday things such as supermarket bills and transport by card.

However, some tourists on low budgets are not convinced.

“I will probably always use the way that gives me the most pesos,” Spating said. At the time of writing, there is a small difference of 30 pesos per dollar between the informal (blue) and MEP exchange rates. “I also prefer cash because, when I wanted to pay the hostel with my card, for example, the owner told me it’s an extra 5%,” she added. 

It is worth noting that some businesses, especially informal traders in smaller and more remote areas, don’t take card payments, so it’s always a good idea to carry cash, just in case.

A side effect

The new exchange rate is designed for foreign tourists, but Argentine residents who have foreign credit cards can also take advantage of it because the Economy Ministry currently has no way of telling whether a cardholder is a resident. Carlos, a 33-year-old Argentine software engineer, who asked the Herald to withhold his real name because he was concerned about possible legal consequences, tried both his Visa and Mastercard U.S. cards, and the “tourist dollar” exchange rate worked like a charm.

Like a minority of Argentines that work remotely for foreign countries and could open an account in an overseas bank, his dollars are now worth nearly twice as much as before.

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