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........

© Buenos Aires Herald