By Manuel Beaudroit | 5-Minute Read
In the last year alone, 11% of American workers—approximately 17.3 million people—identified as digital nomads, a number that has surged since the pandemic normalized remote work. The ability to work from anywhere, coupled with rising living costs in states like California and New York, has driven many to seek a more affordable lifestyle abroad. Between 2022 and 2023, the number of nomads working independently—freelancers, self-employed individuals, and independent contractors—increased by 14%.
Latin America has become a popular destination for these workers, offering convenient time zones and favorable U.S. dollar exchange rates. In Argentina, for instance, a three-bedroom apartment in downtown Buenos Aires costs around $540, compared to $4,500 in Los Angeles. This financial advantage allows digital nomads to work from scenic locations such as Costa Rican beaches, bustling Argentinian cafés, and vibrant Mexican neighborhoods.
However, this seemingly idyllic lifestyle comes with significant challenges, especially when it comes to getting paid on time, integrating with local economies, and managing finances. Below are the top three challenges faced by digital nomads:
1. International Transaction Fees
Many digital nomads maintain their U.S.-based bank accounts, relying on card payments while abroad. Others opt to open foreign accounts. Both choices come with financial drawbacks. International payment fees can average 3% per transaction, leading to substantial yearly losses. Meanwhile, those receiving payments in foreign accounts face hefty international transfer fees, sometimes exceeding 10%, which can result in missed payment deadlines and overdrafts.
Digital banking companies like Revolut and Wise are working to mitigate these issues, but many of their solutions are still limited in emerging digital nomad hubs and come with their own set of fees. Cryptocurrency wallets are also becoming popular, offering more lenient fees and cash withdrawal options globally. However, mastering crypto requires time and research.
2. Cash-Centric Economies
In Latin America, where 48% of workers are informal, cash is often the preferred method of payment. Digital nomads may find themselves withdrawing large sums of cash monthly, incurring additional ATM fees. Paying bills can also be challenging, as many services only accept debit payments from local bank accounts or in-store cash payments.
The region is gradually catching up with global payment trends, with startups like Bold and Clover providing mobile point-of-sale (POS) solutions for small businesses. These innovations are helping to bridge the gap between digital nomads and local economies. However, accessing local instant payment platforms like Brazil's PIX remains difficult for nomads without a national bank account.
3. Complex Financial Management
Even after finding ways to avoid high fees and manage local payments, digital nomads often struggle with juggling multiple bank accounts, cards, and apps. Invoicing and receiving payments can become chaotic, especially when dealing with long transfer processing times. Only 26% of freelancers are paid on time, and over half are owed more than $50,000 for completed work.
Digital nomads need centralized financial solutions to keep their finances in order as they move from country to country. Freelance budgeting apps that manage income across multiple accounts and currencies could be invaluable tools for these remote workers.
As Latin America's fintech sector continues to grow, more financial alternatives will emerge to support digital nomads. Adapting to foreign customs, including financial systems, can be challenging, but with patience and a willingness to connect with locals, digital nomads can overcome these hurdles and thrive in their chosen destinations.
