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Why isn't Argentina's ATM count growing faster?

A new report indicates that small-denomination banknotes might be making a big dent in the lifespan of the nation's ATMs.

September 19, 2014

Argentina needs more ATMs. This is the conclusion of a privately commissioned study released yesterday, a report by the Buenos Aires Herald said.

The report said that despite an increase in ATM numbers of 136 percent between 2005 and 2012, the current number of 18,400 units yields a ratio of only 54 machines to 100,000 adults. This compares with ratios of 119 and 67 per 100,000 in Brazil and Chile, respectively.

On the other hand, Uruguay has only 42.69 machines per 100,000 people and Paraguay and Bolivia have even smaller ratios of 19.78 and 27.89, respectively.

Interestingly, the report by Quantum Finanzas also found that Argentinians on average take out 13 banknotes in a cash withdrawal — triple the worldwide average of 4.5 banknotes.

This large number of bills per withdrawal is a major factor behind the faster deterioration of its ATM bill dispensers, which reduces their overall life span. Dispensers represent between 60 and 70 percent of the overall cost of an ATM machine, the report said, alleging government policies have put pressure by increasing operating costs.

Because the government refuses to introduce higher note denominations, Argentina's ATMs are subject to an unusually high level of wear and tear on note dispensers and an ATM lifespan 30 to 40 percent shorter than the average. It follows that the higher replacement rate ultimately slows down the rate of expansion of the country's ATM network, according to the report.