For many users of the bargain portal "Mydealz", the peso deal is the coup of the year: a few days ago, the member "kenixa" reported that a Visa credit card and a Paypal account can apparently be used at all acceptance points of the payment service provider up to You could save 40 percent on every purchase - the entire Internet was thus heavily discounted. What followed was a real spending spree. In more than 35,000 comments, like-minded people gave advice on where to get the best discounts and what you should definitely buy.
This mania was triggered by a peculiarity related to the Argentine peso. In fact, the government had set up a very attractive exchange rate for payments with foreign credit cards to strengthen the economy in Argentina.
It was thought like this: If you buy something as a tourist with your credit card on site, your expenses will not be converted into the "Dollar Oficial", but the much better off "Tourist Dollar". Argentina wanted to create an incentive for purchases in the country and thus bring foreign exchange to the economically weakened country.
That's the theory. Because in practice, the "tourist dollar" had an impact in completely different countries in the world. It turns out that the preferred rate also came into play if you set a Visa credit card to the currency "ARS" (Argentine Peso) on Paypal and then made a purchase with that card at any online store.
During the purchase, PayPal first displayed the amount in ARS, next to it the equivalent in euros. At first glance, nothing was "won" in this order step, since the amount in pesos corresponded exactly to the requested price in euros. An example: Goods for 109.95 euros cost 22,958.18 ARS - at an exchange rate of 1 to 0.0048. Exactly what it would have been in pesos in euros.
But the rate at Paypal was wrong - at least not if you had paid with a Visa that was set to ARS. Because Visa worked in the background with the exchange rate for the "tourist dollar". The rate here: 1 to 0.002699. This corresponds to a reduction of 43.77083 percent.
And indeed: on the billing account, 109.95 euros suddenly became 64.84 euros - or translated: Despite additional fees, there was a discount of 41 percent.
The tip, which was a bit complicated to explain but very easy to use, spread like wildfire, there was no stopping it. The bargain hunters spurred each other on to buy more and more. What initially started with small voucher cards quickly became large televisions, gold bars, watches, shoes and all kinds of expensive technology.
Later, they gave each other tips on where to buy stocks or cryptocurrencies with Paypal - the discount had a direct impact on their own savings. Just as some encouraged each other to send money to each other via Paypal – because that also worked with a discount, as a report from “Bild” confirmed. In plain language: If someone with an ARS visa sent a friend 1000 euros, they received the full amount, while the sender's account only showed around 600 euros as a reservation - 400 euros profit from nothing.
In the meantime, the frenzy has cooled off a bit, especially since PayPal has probably put an end to the hustle and bustle, according to "Mydealz". The only way to still benefit from the Visa course is apparently online shops where you can pay directly in Argentine pesos – which far fewer contact points offer than payment via PayPal.
What remains are questions. While the first goods, vouchers or shares have already reached the buyers, most of them still rub their eyes in disbelief. Firstly, many transactions only show up as hold orders in buyers' accounts, creating uncertainty about the true amount of the charge, and secondly, it's hard to believe that exploiting this error will remain free of consequences - even though many hope so.
The most common questions that observers and beneficiaries of this unusual savings measure now ask themselves are something like this: "Who pays for the difference between the actual purchase price and the advantageous exchange rate?", "To what extent is it possible to pay the payments to the accounts retroactively? correct (difference compensation)?", "Who is causing the problem? VISA? Paypal? Argentina? Or was it intentional?" and "To what extent is a purchase with a foreign currency punishable? What can customers expect?"
The problem: there are many questions, but no answers. Not really. The star confronted Visa, the Argentine central bank, German banks, the operators of "Mydealz", the law firm WBS-Law and of course PayPal.
Visa and the local banks in particular responded quickly. Almost at the same time, we were told that nothing could be said about it. The topic is "special". The ING referred to "Visa and possibly Paypal", Visa, on the other hand, kept a low profile and did not comment on the incident. "Please ask PayPal," was all they said.
But even if PayPal has apparently reacted in the meantime and put a stop to the bargain hunt, the company has not yet commented on request. The same applies to the Central Bank of Argentina.
Attorney Christian Solmecke from the Cologne law firm WBS (Wilde Beuger Solmecke) provides the first concrete information on the case. In order not to omit any information, the answers to our questions follow in full quotation:
Who pays for the difference between the actual purchase price and the advantageous exchange rate?
Christian Solmecke: "This is a chain of participants. Most likely, the Argentine State Bank, i.e. the Argentine state, will have to pay in the end. Because if you pay via PayPal in Argentine 'tourist' pesos and deposit VISA there, then PayPal will take it Money goes directly to VISA. VISA then pays in advance and has the damage first. However, the company should be able to recover the difference from the Argentine State Bank. If there were no such agreement, VISA would make a big loss.
It is unclear whether the Argentine government has agreed with VISA that the refund only applies to payments made in Argentina. If there is such an agreement then VISA would most likely be to blame and they were left with the money. However, we do not know whether it would be technically possible for VISA to only allow payments in one currency if they take place in the country.
Incidentally, the trick only works so well with VISA, since MasterCard only wants to pay out the refund afterwards and nobody knows whether that will still happen now or whether they will put a stop to it."
To what extent is it possible to subsequently correct the payments on the accounts (difference adjustment)?
"If you paid directly with VISA, it shouldn't be possible afterwards. Visa's terms and conditions do not provide for the possibility of canceling the payment afterwards in such cases. However, users report that credit cards will be blocked in the future.
However, if you have deposited your VISA with Paypal, it could be that pure transfers are cancelled. According to Paypal's terms and conditions, one may not 'convert currencies for speculative transactions ... or other activities ... with which money is to be earned or generated primarily on the basis of exchange rates.' According to the terms and conditions, the consequences of a violation would include: We can withhold, cancel or reverse any transaction. However, the clause should only apply if money is moved back and forth from Paypal accounts in order to generate money out of nothing.
The situation is different, however, if you actually buy goods with the money. The clause explicitly states that money must be earned or generated. When buying goods, however, you do not earn any, but receive something in return for less money. It is therefore unlikely that you will suddenly be stuck with a purchase contract and have to pay the original price."
Who is causing the problem? VISA? PayPal? Argentina? Or was it intentional?
"I can't say that exactly because I don't know the exact agreements between the Argentine state bank and the card companies. However, it currently looks as if the Argentine government had not considered this gap or not taken it seriously enough. They were primarily concerned with that to bolster purchasing power through tourists and boost their ailing economy. Unfortunately, these 'deals' are now further weakening the economy. I don't think the card companies were encouraged to limit payment in 'tourist pesos' to payments that were transacted domestically. This is also likely to be technically difficult to achieve."
To what extent is a purchase with a foreign currency punishable?
"There is most likely no criminal liability here. There is no deception for fraud - the customers do not pretend to be based in Argentina, but exploit an existing gap. Computer fraud is also out of the question. Finally, one could think of credit card misuse think if there has been a serious violation of the provisions of the credit card agreement. Here, however, the terms of use do not even provide for a ban on such transactions."
What's in store for the customers?
"Customers probably have nothing to fear from criminal law. If they paid with Paypal, it could be that at least pure transfers are reversed - purchases, on the other hand, are probably not. Customers are also already reporting that credit cards have been blocked. PayPal could possibly also block the account first. That's risk-free So not all of it. And: You can only change your currency on Paypal once a month."
It seems that the use of this loophole is not only limited to purchases, but also to other PayPal functions. Many say they have sent money to each other (“Bild” also confirms that it works). So if you send 1000 euros to person X, X will receive 1000 euros, but Y will only pay 600. How can that work? What happens in these cases?
"The trick lies in debiting the money from your own account. Paypal uses the normal exchange rate to calculate how many (normal) Argentine pesos have to be debited. Paypal then forwards this amount to VISA so that VISA can debit the money from the card Now, of course, only euros can be debited from a German account, so that the pesos that have just been calculated must first be converted back into euros. And the reduced 'tourist dollar conversion price' applies to this conversion , so that only 60% is debited from the debited account.
According to the terms and conditions, however, it could be that such transactions can be reversed."
I would have the same question about share purchases via Etoro, for example, where, according to their own statements, many users bought shares with ARS in order to reduce the purchase price by 40 percent.
"Here, too, you have to take a look at Etoro's terms and conditions: I only discover direct reference to extra fees when exchanging into foreign currencies (points 14.12-14.14; 21.4). These should be lower than the savings.
However, the Trading Account may be terminated if Etoro deems it 'reasonably necessary' to 'prevent any circumstance which (they) reasonably consider may constitute or constitute a breach of Applicable Law (including but not limited to market abuse, gaming the system or scalping)'. Depending on how Etoro evaluates the measure themselves, they can act on the basis of their terms and conditions."
