Argentinian fintech groups had welcomed the possibility that employees could deposit their salaries into virtual wallets for the first time. However, lawmakers removed this provision, and many see it as promoting the interests of traditional banks.
To gain broader support, President Javier Milei's party agreed to remove that article from the bill, even though polls show a large majority of Argentinians hope for the freedom to choose their salary deposit location themselves.
Distrust in banks drives the adoption of wallets.
In Argentina, the law mandates that employees deposit their salaries into a traditional bank account. Nevertheless, the adoption of digital wallets in Argentina has grown significantly in recent decades.
The background of the growth is partly due to limited access to banking services. A central bank survey in 2022 showed that only 47% of Argentinians have a bank account, largely due to longstanding distrust in traditional systems.
Long-standing economic instability, such as the 2001 ‘corralito’ deposit freeze, ongoing inflation, and repeated restrictions on the availability of funds have shaken trust in banks. This has accelerated the shift to cash and dollar-denominated savings.
In response to this, digital wallets offered by fintech companies, maintained by non-bank operators, have expanded the availability of financial services in Argentina.
Services like Mercado Pago, Modo, Ualá, and Lemon are now among the most popular in the country. Many outside the banking system use these apps as their first touchpoint with digital financial services.
Therefore, fintech leaders welcomed the proposal that would have allowed Argentinians to transfer their salaries directly to virtual wallets. However, this provision was removed from the bill before it could be addressed in Congress.
“The removal of Article 35 from the labor reform took away the opportunity for Argentinians to freely choose where they want to receive their salaries. In practice, salary disbursement through a traditional bank is still required, due to strong pressure from the sector.
Citizens have already shown their preferences: nearly 75% of transfers in Argentina are made through CVU identifiers used by digital wallets. Millions receive their salaries first in the bank only because regulation requires it, but then transfer the money to fintech services to seek better products, lower costs, and higher returns,” Lemon's CFO Maximiliano Raimondi told BeInCrypto.
The political compromise favors banks.
Bank unions were reactivated this week. They sent letters to key senators and expressed their objections to salary payments to digital wallets.
Opponents justify their stance by arguing that digital wallets are not sufficiently regulated, can pose systemic risks, and may even increase economic exclusion.
“They do not have the same oversight, regulatory framework, or audit mechanisms as banks. Approval would pose direct legal, financial, asset-related, and systemic risks that would affect workers and the entire financial system,” Argentina's leading bank, Banco Provincia, stated in its announcement.
Fintech organizations denied the allegations and stood by their position that they are not true.
“All payment service providers (PSPs) are regulated and supervised by the Central Bank of Argentina (BCRA),” said Lemon's CFO Maximiliano Raimondi in his statement. “Digital wallets have enabled millions of people to open a digital account easily and free of charge, as well as access better financial solutions.”
According to a recent study by consulting firm Isonomía, 9 out of 10 Argentinians would like to choose where to deposit their salaries. The tendency was particularly pronounced among independent contractors and informal sector workers. The report also indicated that 75% of Argentinians use digital wallets daily.
Ultimately, the banking sector got its way before the bill progressed to a Senate vote. News reports indicated that the government removed that provision to avoid conflicts with banks and to increase the bill's chances of being ultimately approved.