Uber Technologies Inc. and bitcoin startup Xapo have joined together to give consumers in Buenos Aires a new way to pay for rides after banks in Argentina’s capital began blocking debit-card charges for the ride-sharing company.
Xapo offers a pre-paid debit card tied to a wallet containing bitcoin, a digital currency not tied governments or banks. Last week, Uber Argentina began offering discount codes for Xapo users in that country, Anni Rautio, who runs Xapo’s debit-card program, said in an interview.
“It’s not a formal partnership, this is more on a quick agile basis,” Rautio said. “What this means for us is hopefully we are going to be able to gain a better foothold in Argentina.”
For Xapo and bitcoin faithful, the Uber alliance is a big deal, as the digital currency is still not widely used to pay for goods and services. It is more popular with investors in countries like Argentina, where the value of official currencies exchange rates can be eaten up by inflation and consumers seek safety in financial instruments out of central bank control, such as bitcoin. More recently, investors worried about the U.K.’s decision to exit the European Union rushed to bitcoin as well.
For Uber, the move is likely only one salvo in a long uphill battle to gain a foothold in Argentina. Local authorities have reportedly raided its offices and filed a tax-evasion complaint against the company. Uber’s arrival in Buenos Aires several months ago was greeted by protesting taxi drivers and blocked roads -- while signups by drivers and riders have happened faster than anywhere else in Latin America, company officials said.
“We have a local partnership with Xapo -- a prepaid credit card that accepts bitcoin as one of their payment methods -- in Buenos Aires,” Uber spokesman Matt Kallman said in an e-mail. “We do not accept bitcoin as a currency for payment.”
But Uber’s use of Xapo could eventually expand beyond Argentina, into other countries where Uber is having trouble gaining government’s approvals, Gil Luria, an analyst at Wedbush Securities, said in an e-mail.
“Xapo has had success in integrating bitcoin into a variety of Latin American applications, including social media, and the addition of Uber opens up a new set of opportunities,” he said. “It appears that Uber Argentina is incorporating bitcoin because they are limited in their ability to link to traditional bank cards. If this becomes a broader need for Uber, Xapo’s bitcoin debit card could become a funding method in other Uber markets, especially in Latin America.”