By Hernan Nessi
BUENOS AIRES, Sept 4 (Reuters) - When traffic authorities confiscate a delivery rider's motorcycle in Buenos Aires, getting back to work can depend on taking out costly digital loans, feeding a debt cycle that is increasingly binding Argentina's gig workers to the apps they rely on for income.
Albert Quintero, a 41-year-old courier, earns on average 70,000 pesos ($46) per day delivering takeaway meals. But recovering an impounded motorcycle can cost around 140,000 pesos ($90) in fines
and fees, a bill he says many workers can't afford without borrowing.
More app workers are turning to fintech loans, including credit offered by the same delivery platforms they work for, despite interest rates that regularly run into triple digits.
Apps such as PedidosYa offer loans to riders at a 131% annual rate, while digital wallet Personal Pay charges around 170%.
"There are many who don't have the money," said Quintero, and so they take on debt.
As households in Argentina grapple with rising living costs and concerns over jobs, fintech apps are becoming an important source of credit. They also increasingly offer a window into how workers and families are navigating President Javier Milei's economic overhaul, which includes belt-tightening reforms that have pinched Argentine households already under financial strain.
The country's fintech lending sector has expanded 20-fold, to 10 million individual loans, compared with 500,000 loans six to seven years ago, according to Mariano Biocca, executive director of the Argentine Fintech Chamber, an industry group.
The rise comes as Milei's reforms begin to reshape Argentina's financial system.
For years, soaring inflation, repeated recessions and sovereign debt crises discouraged lending. As inflation has slowed and economic stability improved, banks and digital platforms are lending more, while government austerity measures, like cuts to subsidies, have squeezed household budgets, increasing credit demand.
STRUGGLING TO REPAY
Nearly 6 million people are more than 90 days behind on repayments, almost a third of all borrowers, estimates compiled by the Fintech Chamber show. The ratio of bad loans among households rose to 12.8% in June, the highest level since records began in 2010, according to central bank data, and up from 2.8% when Milei took office in late 2023.
Analysts said the change extends beyond the economy. Borrowers who grew accustomed to high inflation eroding the real value of their debts are now grappling with sharply positive real interest rates — often in triple digits — that make loans more expensive to service. A report by consultancy Analytica found young people were the most affected by bad debt.
"They get easy money from digital wallets, but they don't see the interest they are paying," said Enrique Tobani, who attended an August protest outside the Economy Ministry in Buenos Aires demanding debt relief.
"Every neighbor, family member, worker you speak to, everyone is going through the same situation," Tobani said.
CALLS FOR DEBT RELIEF
Milei's government has so far resisted calls by unions, customers and advocacy groups for state-backed debt relief and instead has largely characterized rising household debt as a matter between private parties. Officials have described unpaid loans as a temporary consequence of efforts to expand Argentina’s private credit market, which at 12% of GDP remains well below neighboring Brazil's roughly 80%.
Brazilian policymakers last week voiced similar concerns over rising household indebtedness, driven by costly credit products and weak lending standards.
With concerns about jobs in Argentina now overtaking inflation in public opinion surveys, analysts say personal indebtedness could become a political problem for Milei, ahead of the 2027 election.
"A stronger external account will not bring him success in the 2027 campaign if household debt, weak consumption and precarious employment keep defining daily life," said Mariano Machado at risk consultancy Verisk Maplecroft.
Although inflation has eased, many say incomes have failed to keep pace with living costs, forcing households to rely more heavily on credit to cover everyday expenses.
Fintech companies have extended credit to those who lack stable incomes or formal employment, according to Biocca.
"They ask for requirements that are too demanding," said Marcelo De Mattei, a 44-year-old delivery rider, referring to traditional banks. He couriers to supplement his income, earning about $13 daily.
Banking groups and fintech firms are calling for lower taxes on loans to reduce borrowing costs.
The banking association, ABAPPRA, proposed changes on August 28 to central bank rules that would give lenders greater flexibility classifying borrowers in arrears and accounting for overdue loans.
At the protest in Buenos Aires, Oriana Fernández of advocacy group Organized Debtors said loans were increasingly a way to get by.
"We see that people are going into debt to cover their basic needs and everyday expenses," she said.
(Reporting by Hernan Nessi; Additional reporting by Miguel Lo Bianco; Writing by Lucinda Elliott; Editing by Aurora Ellis)
