Virtual wallet loans in Argentina: credit boom, sky-high rates and record delinquency |
In a video that went viral again this week, a young woman explains her financial strategy: “I take out a AR$20,000 loan from Mercado Pago. And to pay that loan, I take out a loan from Ualá. Then I take out another loan from Mercado Pago and use that to pay Ualá. Mercado Pago and Ualá pay each other; I don’t put in a single peso.”
The friend filming her tells her: “Don’t tell your dad because he’ll kill you.”
The clip would be funny if it didn’t reflect the drama many Argentine families are currently facing. According to official figures, delinquency in non-bank credit, which today is mostly made up of e-wallets, reached 22.8% in December. That means nearly one in four personal loans taken out through virtual wallets is in arrears.
Non-bank lending is booming. According to consultant firm EcoGo, the figure grew 1.2% month-on-month in real terms in December, reaching a total stock of AR$ 13.15 trillion (US$9.4 billion). Over the past three months, it has expanded faster than bank credit.
A multi-faceted phenomenon
For Lucía Cirmi Obón, an economist with a master’s degree in development, the surge in app use — and delinquency — can be attributed in part to “an economy that grows without generating jobs or redistributing income.”
National statistics institute INDEC recently reported that Argentina’s economy expanded 4.4% in 2025. That growth, however, was driven mainly by agriculture and financial intermediation, two sectors that do “not translate into more money for the middle and lower classes,” Cirmi Obón argued.
“Debt is currently filling the gap left by missing wages or insufficient income, even for people holding multiple jobs,” she told the Herald.
According to EcoGo, non-bank credit now accounts for 2.4% of consumer lending and amounts to 143% of the total wage bill of self-employed and informal workers.
Cirmi Obón added that virtual wallets have become a source of borrowing partly because a large segment of the population “was excluded from the credit system, either for not meeting requirements or because of risk aversion in a country where the banking system left people out for a long time.”
According to Ariel Parajón, a political scientist and specialist in drug policy, lenders of last resort emerged in the country during economic crises such as those of the late 1990s and early 2000s. “These were financial institutions or lenders where people could leave their ID card or a copy to access quick credit and obtain cash,” he said, adding that fintech companies replaced them.
“Technological infrastructure allows you to have the casino, in the case of digital betting, and the bank that lends you money on the same device,” said Parajón. “Permanent immediacy, the acceleration of information flow, and economic urgencies lead to a lack of reflection,” he said, adding that apps concentrate the information on users’ money movements that could become proposals to take debt.
Cirmi Obón agrees, adding that fintech companies often charge higher or less regulated interest rates to cover that risk. “But there’s also another factor: the profound lack of financial education we all have,” said the economist, who is also part of the Paridad Macro and Futuros Mejores initiatives.
Today, for example, the Annual Total Financial Cost (which includes interest, insurance, commissions, and administrative fees) of a 12-month personal loan from Mercado Pago can range between 400% and 500%. By comparison, a similar loan from Banco Nación (without signing up for its “Cuenta Nación” service package) carries a rate of 169%. This reporter tested it: on the app founded by Marcos Galperín, a AR$916,146 loan could be repaid in 12 monthly installments of AR$158,369.89 — meaning a total repayment exceeding AR$1.9 million, more than double the amount borrowed, and that’s without factoring in additional charges.
“The space that used to be occupied by companies offering usurious loans is now in these apps, which also often allow people to use credit to pay for basic expenses. That’s largely what people are covering with these loans,” the economist added.
According to a report by the Institute of Statistics and Social and Economic Trends at the Córdoba Grocers’ Center, 88.1% of households in that province financed food purchases through credit cards, virtual wallets, store credit, or borrowed money. That means only 11.9% were able to cover those expenses without resorting to some form of financing.
“A much faster digital access means that many people are taking on debt right now without even realizing it. We have countless cases like that,” Cirmi Obón said.
In her view, these apps need to be regulated and taxed — not only on interest rates. It would be, she argues, “an opportunity for the state to understand a world that until now has been informal,” as well as a chance to support people who rely on virtual wallets and even “improve tax collection to fund future pensions.”