Contxto – The quest to supply financial services to unbanked Latin Americans continues as Mercado Libre’s fintech branch, Mercado Pago, sets its eyes on Mexico. After reportedly on-boarding two-thirds of Argentina’s accounts, now the burgeoning platform aims to test the waters in the region’s largest Spanish-speaking country.
According to Vice-President of Mercado Pago, Osvaldo Giménez, the company plans to launch in Mexico within 2020’s first quarter.
Mercado Pago success in Argentina
Less than two years old, Mercado Pago has had a positive reception so far in its country of origin. With this as a precedent, the fact that Mercado Pado created one million accounts since entering the scene is reassuring. In total, it has allured over 1.4 million Argentines to sign up, allowing them to invest capital in low-risk common funds.
Earlier this year, PayPal even reportedly invested US$750 million in the up-and-coming app. Mercado Pago, even as the e-commerce mammoth’s relatively new fintech platform, has certainly contributed to Mercado Libre’s growth.
In terms of transactions alone, the enterprise saw a doubling in the number of sales in this year’s third quarter, compared to the same period last year. Along those lines, there was also a value increase of 66 percent to US$7.6 million.
Based on this positive reception, the Argentine fintech venture hopes to emulate this track-record in Mexico.
Mercado Pago in Mexico
All things considered, I’m not certain that Mercado Pago will receive as much love in Mexico as in Argentina. Prominent e-wallets such as BillMo and Weex already have quite an impressive market penetration, not to mention a maturing fintech ecosystem.
All the while, Mexicans are still not interested in big-name financial entities. Even the National Bank of Mexico is having a difficult time promoting its new electronic QR payment platform, CoDi.
And, of course, while Mexico has its fair share of economic issues, Argentina’s ongoing financial instability doesn’t quite compare. It would seem that the South American country is in a league of its own.
Yes, most Mexicans still shy away from traditional banking institutes, but this is more of a historical trust issue. On the other hand, the necessity to maintain the value of capital is paramount in the context of the crippling depreciation of the Argentine peso.
Considering a difference of an annual inflation rate of 50 percent and ask yourself; how much do Argentina and Mexico actually have in common?