Latin America's e-commerce and fintech giant MercadoLibre Inc. aims to expand product offerings with a new banking license in Mexico.
MercadoLibre Inc., a leading e-commerce and fintech company, has initiated discussions with Mexican authorities to apply for a banking license.
Gimenez stated that the opportunity is substantial, drawing parallels with the significant growth in banking access, electronic payments, and credit seen in Brazil over the past decade. MercadoLibre aims to play a pivotal role in this growth in Mexico by launching more products. The process of obtaining the license is expected to take 12 to 24 months. The company considered purchasing a banking license but decided against it.
Mexico has become a crucial market for financial services startups, with less than 50% of the population holding a bank account. Several fintech firms are seeking banking licenses to offer a comprehensive range of services. Argentina’s Ualá acquired a license by buying ABC Capital, UK fintech giant Revolut received a license in April, and Brazil’s Nubank has formally applied for one. Four other local companies are also in the process of obtaining licenses.
MercadoLibre currently operates in Mexico under a fintech license known as IFPE, which allows it to provide various services, including a wallet app. A banking license would enable the company to receive payroll deposits, lift the cap on the amounts held, and expedite the approval and issuance of credit cards.
Gimenez highlighted that a banking license would simplify various operations, from offering credit to providing investment products. MercadoLibre aims to become the largest digital bank in Latin America, and this move aligns with that ambition.
In Mexico, Mercado Pago has already issued 1 million credit cards and provided over 1 million loans to small businesses and 12 million credit lines to users within a year. The demand for credit is the highest, according to Gimenez.
MercadoLibre does not have a bank license in other countries it operates in and does not plan to seek one, as it can provide the desired services under the existing frameworks.
The company plans to add 8,200 new jobs in Mexico this year and invest $2.5 billion in its operations in the country. MercadoLibre has lending agreements with Goldman Sachs Group Inc., Citigroup Inc., and JPMorgan Chase & Co. for about half of its credit origination.
“We’re very enthusiastic about the growth we’re seeing in Mexico,” Gimenez said. “Our products, marketplace, payment options, and credit services have seen significant growth, prompting our investment, office expansion, and hiring spree.”
