When Nick Pagsanjan, a Filipino American citizen visiting Argentina, did his latest weekly shop at the local COTO supermarket, he noticed something was off. His Bank of America app showed that the transaction was being processed at the official rate, meaning he was seemingly getting half as many pesos per dollar as he used to.
Pagsanjan wasn’t alone: in recent weeks, tourist forum users have started to claim that the foreign tourist dollar rate, which launched in November and charged them the MEP exchange rate (currently at AR$359 per dollar), had been abolished. Their card purchases seemed to be going through at the official exchange rate, AR$193 at the time of writing: in other words, everything suddenly seemed to be nearly twice as expensive.
Many tourists like Pagsanjan had been using their cards since VISA announced on December 15 that it would switch to the foreign tourist dollar rate, and his app always showed the MEP rate until a few weeks ago.
But when his groceries suddenly cost him double, he stopped using his card. “I went back to sending money to myself through Western Union,” Pagsanjan said.
However, the preferential exchange rate designed for foreign tourists who use VISA and Mastercard debit, credit and prepaid cards is still in force. It applies to purchases made in Argentina with these cards, although it does not cover cashpoint withdrawals and American Express continues to use the official rate.
Government sources and tourists confirmed to the Herald that the confusion was caused by a change in how some banking apps display transactions. Sources close to the matter told the Herald that VISA detected a glitch in some American banks’ apps, causing purchases to be calculated at the official rate initially, but then processed at the MEP dollar rate a few days later.
“In their bank statements, they are going to see the transaction at the MEP dollar,” said insider sources.
Pagsanjan later confirmed this. Three days after his latest supermarket purchase, his bank statement showed the transaction made at the MEP dollar. Three other tourists told the Herald their cards worked the same way.
The confusion originated because unlike Mastercard cards, which process purchases at the official rate then refund cardholders the difference, VISA cards processed the purchases at the MEP rate automatically until recently.
However, the recent change or glitch was not informed to cardholders by the banks or the government. A 29-year-old freelance writer from the US visiting the country said she and other tourists and immigrants were finding it “very confusing and hard to figure out”.
Moreover, store owners and employees will often encourage tourists to pay in cash due to the “unfavorable exchange rate” because they do not realize the foreign tourist dollar rate exists at all. Some of them do not even take foreign cards, despite having no reason to reject cards issued in countries other than Argentina.
“I feel like there’s not really clear information about what’s happening and it’s not really clear like who to turn to to get that information”, the U.S. writer said.
The tourist dollar was launched on November 4 as a way to make the country cheaper for tourists and dissuade them from going to illegal exchange houses that offer the blue dollar exchange rate. The government also hoped the measure would boost reserve accumulation.
Official sources told the Herald that foreign tourists are still using the tourist dollar, the greatest takeup being from tourists from the United States, Brazil, Chile, and the United Kingdom, in that order. Mastercard confirmed that foreign card transactions increased by 25% in value and 28% in volume within a week of the new rate’s implementation. Until the new rate was implemented, payments made in Argentina with foreign credit and debit cards were changed at the official dollar exchange rate.