by Jorge Barnfather, Consultant, Latina Finance & Co
Over the last few years, Argentina has witnessed a significant evolution and strengthening of its domestic financial system, and particularly a modernisation of its cash management environment. This evolution has been made possible thanks to the combined efforts of both public organisations, such as the central bank, and the private sector including significant investment made by banks.
Despite this, for those companies, transactions with individuals and SMEs, cash is still king, as a large proportion of these deals are actually cash settled. With a population exceeding 40 million, the number of current accounts in the whole system as of December 31 2009 amounted to 3.3 million, indicating that efforts towards motivating the population to operate banking accounts have not been entirely successful.
Over the last few years Argentina has witnessed a significant evolution and strengthening of its domestic financial system.
This situation has provided, for example, a good opportunity for non banking agencies to increase their volume of transactions. These agencies receive over 30 million collections monthly, a significant number compared to the 8 million cheques cleared through the national ACH in March 2010. A large part of the population still does not have access to bank accounts, or wishes to remain out of the system because of tax or social and economic implications. The tax on debits and credits (0.6% on each side), the significance of the informal economy and the lack of trust in the banking system are some of the aspects which have lead to this situation. Despite this, and the fact that regulations are still subject to continuous changes, corporations operating in the B2B segment or with counterparties holding operational banking accounts should be able to benefit from recent product evolution and improvements.