Shoppers who have never set foot in Argentina have been scoring massive discounts on online purchases by setting the payment currency to Argentine pesos.
The trick, which meant their transactions were processed at the “foreign tourist dollar” rate intended for international visitors to Argentina, was used as far afield as Germany and Indonesia. It was the result of an error in PayPal and VISA systems. PayPal has since corrected the mistake and VISA has alerted other retailers about it.
The “foreign tourist” exchange rate gave international visitors to Argentina access to a rate similar to the unofficial dollar when they made card purchases, meaning they could get nearly 80% more pesos for every dollar without having to resort to informal exchange houses or Western Union.
The difference between the official and tourist exchange rates produced a loophole creating the discount because prices were shown at the official rate, but VISA converted the fee from the original card’s currency to Argentine pesos at the tourist dollar rate.
BILD reported that one customer had made a €1000 transaction but was only debited €600. Another said they had bought a €171 piece of software for €100. Another user published on the MyDealz.De portal that they had made a €100 purchase on Amazon, but €77.80 were debited. A user on Chollómetro, a Spanish website dedicated to bargains, posted that he had bought a €1449 iPhone 14 pro for €854.59 in El Corte Inglés, the biggest department store group in Europe.
When one user asked “who is paying for the difference?,” another one said “the Central Bank of Argentina”. However, sources inside the Central Bank told the Herald that the trick was not affecting the official and financial Argentine currency markets. Other market sources indicate that, since the transactions were made by non-Argentines outside Argentina with foreign cards, it was likely the retailers who paid for the difference: in other words, the retailer is understood to have received the lower fee, rather than the advertised price. It is still unclear whether VISA will compensate them.
According to MyDealz, the trick only worked for Visa debit and credit cards such as DKB, ING Diba, Amazon Visa, Klarna, Vivid and Barclays, but not for Mastercard and Revolut users.
The German outlet BILD reported that PayPal corrected the “curious situation”. However, according to MyDealz.De, it is still possible to get the discount by paying with Argentine pesos on certain websites. Sources indicate that VISA has since alerted retailers to the loophole.
In the last few days, American VISA card holders in Argentina reported that their purchases were being charged at the official rate, prompting speculation that Visa had canceled the foreign tourist dollar in order to close the loophole.
However, sources close to the matter told the Herald that this was due to an error in the banking apps, which showed an inaccurate conversion rate to its users, but that the transactions were in fact made as per the MEP dollar, which the foreign tourist dollar is based on. Government sources told the Herald that VISA is still offering the foreign tourist exchange rate for all foreign cards.
PayPal is not the first online payment company to change its policy on Argentina’s currency. Last week, London-based Wise sent an email to their users stating that they would close all balances in Argentine pesos due to the country’s “multiple exchange rates,” a decision made after the “foreign tourist rate” was created by the Central Bank.
Wise will temporarily not allow users to open new Argentine pesos balances, nor convert money from pesos to different currencies. Wise even forbade its users from sending money from pesos to different currencies. However, the company still allows users to spend pesos with their cards.
While this “pause” is in force, Wise will use Visa’s exchange rate, i.e. the “foreign tourist dollar”, for its transactions. “This is Wise’s effective action to enable clients to use the good U.S. dollar rate when spending money with Wise cards in Argentina,” the company told the Herald. Before this measure, they applied the official exchange rate, which represents roughly half as many pesos per dollar. Wise still cannot say if and when they will reopen peso balances for their users.