Argentina Blocks Salary Deposits to Digital Wallets in Win for Traditional Banks

Argentina’s fintech sector had celebrated a proposed labor reform that would allow workers to deposit their salaries directly into digital wallets for the first time. However, lawmakers removed the provision before it reached a Senate vote, a move widely viewed as a victory for traditional banks amid intense lobbying efforts.

Under current Argentine law, salaries must be paid into bank accounts. President Javier Milei’s party initially included a clause that would have given employees the freedom to choose virtual wallets instead. Despite strong public support—polls show that nearly 90% of Argentines favor choosing where their wages are deposited—the article was excluded during negotiations to secure broader political backing for the bill.

Digital wallet adoption in Argentina has surged in recent years, fueled by limited banking access and long-standing distrust of financial institutions. A 2022 Central Bank survey found that only 47% of Argentines had a bank account. Decades of economic instability, including the 2001 “corralito” deposit freeze, high inflation, and recurring capital controls, have driven many citizens toward alternative financial solutions such as cash savings and dollar holdings.

Fintech platforms like Mercado Pago, Ualá, Modo, and Lemon have become central to Argentina’s digital financial ecosystem. For millions, these apps serve as their first entry point into formal financial services. Industry leaders argue that digital wallets are regulated and supervised by the Central Bank of Argentina (BCRA) and provide accessible, low-cost financial tools.

Banking associations countered that non-bank payment service providers lack regulatory frameworks equivalent to traditional banks and could pose systemic risks. Fintech companies rejected those claims, emphasizing their compliance with existing regulations.

Ultimately, the government dropped the proposal to maintain stability within the financial sector and secure the labor reform’s approval, reinforcing the dominance of Argentina’s traditional banking system over digital wallet salary deposits.