Visitors to Argentina who use debit and credit cards issued by Chinese company UnionPay will get almost twice as many pesos as before after the company moved from the official exchange rate to the foreign tourist dollar exchange rate.
The Central Bank enabled the Shanghai-headquartered financial services corporation to switch to the new rate yesterday. Payments made in Argentina with UnionPay cards will now use the MEP dollar (the Spanish acronym for Electronic Payment Market) exchange rate —currently AR$479.35 to the dollar— instead of the official exchange rate of AR$259 per dollar at the time of writing.
The foreign 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, as the country is suffering a major international reserve scarcity crisis, mainly due to a historic drought that reduced income from agricultural exports.
UnionPay now gives cardholders the same rate as Visa, Mastercard, Cabal, and electronic wallets such as Pix. American Express has not adopted it to date.
A government source confirmed to the Herald that the cards bring dollars into the country because, while the Chinese currency is the yuan, the transactions go via the dollar. He also confirmed that the new rate is already in operation for UnionPay cardholders.
The foreign tourist exchange rate allows the dollars tourists use to make payments to be exchanged into pesos through the financial market, instead of in the official foreign exchange market. Although the Central Bank will no longer receive these tourists’ dollars through the official market, the funds increase Argentina’s gross reserves.
The “foreign tourist dollar” only works for purchases, and not cashpoint withdrawals.
Chinese cards in Argentina
According to RBR, a London-based research and consulting firm, in 2015 UnionPay dethroned Visa and Mastercard and now has the largest share of global card spending – it was 48% in 2021. This is mainly due to spending in China, where UnionPay accounts for 95% of the total.
Two weeks ago, on the last day of his week-long official trip to China, Economy Minister Sergio Massa said that growing numbers of Chinese tourists are choosing Argentina as a destination.
“Tourism between China and Argentina generates economic growth and new jobs in our country,” he said. “That is why we are accelerating the implementation of direct flights and the use of the most popular electronic payment systems in yuan in China.”
Massa also said that the Argentine government is seeking to make it easier for Chinese tourists to get visas, and will attempt to reduce the wait for the paperwork to just one week.
According to data from Argentina’s Tourism Information System, China ranks 16th in the ranking of inbound tourism in Argentina, with almost 76,000 arrivals in 2019. The average Chinese visitor spent US$1,860 during their stay, or around US$122 per day.
“The development of Chinese tourism in Argentina is one of the strategic vectors to solve the foreign currency income [problem],” said a communiqué the Economy Ministry released during Massa’s China visit. “Through these incentives the country could go from receiving an average of 70,000 tourists per year to almost 500,000”