Argentine banks unite to give Mercado Pago and fintechs a run for their money

Contxto – It’s no secret that marketplace giant Mercado Libre has been busy scaling its logistics operations and partaking in a large share of Latin America’s e-commerce. In the process, its fintech arm, Mercado Pago, has also been growing.

Thus, multiple traditional banks have noticed and are taking cards in the matter. 

They’ve recently come together to launch Pay Digital, a company in Argentina. This fintech is building an e-wallet called “Dimo” (Dinero Móvil) that will compete with Mercado Pago and even fintechs. Pay Digital also already has over 20 public and private banks registered to connect with its system.

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The app will reportedly be launched in September or October of this year and is being developed under the leadership of Rafael Soto, former General Manager at Nubank in Argentina.

Choosing Soto as Dimo’s CEO shows that banks understand that they need someone with experience in disrupting digital financial services to make a genuine impact.

But the question remains: will banks’ joint forces be enough to give Mercado Pago a run for its money?

Dimo versus Mercado Pago

At the moment, Dimo will complete two core functions.

The first is it will allow users and businesses to make payments via QR codes. It’s through this service that it will more directly compete with Mercado Pago as this is already an option it offers to its own vendors.

Nonetheless, Mercado Pago has the advantage of having launched into market first. Not to mention that it can draw vendors onto its payment platform by offering benefits for their e-commerce business.

Secondly, Dimo wants to make payment transactions a quick process. In that sense, it will be competing with other fintechs rather than Mercado Pago.

By not requiring its users to submit their CBU (a unique banking identification number), Dimo wants to make transfers between people as easy as exchanging their phone numbers and then sending a message.

According to sources at Infobae, a user’s phone number will be linked to their bank account. Because of this, the need to submit their CBU when requesting a transaction is overridden.

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Moreover, with so many banks together on Dimo (like Santander and BBVA), the platform has a large network to more easily connect with the corresponding account. That may be its largest advantage when compared to other fintechs’ e-wallets.

So… if you can’t beat ‘em, join forces against ‘em?

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-ML