Argentine Fintech Giant Mercado Pago Requests a Banking License in Mexico: Why Did It Spark Criticism in Other Countries?

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Marcos Galperin’s fintech will acquire a banking license in Mexico, a process that could take between 12 and 24 months. Although it is not licensed in other countries where it operates, it offers its clients a wide range of financial products.

Mercado Pago announced that it will acquire a banking license in Mexico, a process that could take between 12 and 24 months. Thus, the fintech arm of Mercado Libre will seek to comply with regulations in Mexico and become the most prominent digital bank in that country in an expansion process that will allow it to offer more financial products to its clients.

The decision sparked criticism from competitors in other countries, where Marcos Galperin’s fintech does not have a banking license but offers various financial products.

Marcos Galperin’s fintech seeks to compete with Nubank, which announced that its Mexican subsidiary had requested a license to operate as a multiple banking institution. For its part, London-based Revolut announced in April that it obtained a banking license in Mexico, Latin America’s second-largest economy behind Brazil.  

“Today, we offer services similar to traditional banking in a digital, inclusive and efficient way. Our millions of users see us as their digital bank. Now we want to formalize it and become the largest 100% digital bank in Mexico,” said Pedro Rivas, general director of Mercado Pago in Mexico, in a statement by Reuters.

“We want to evolve to have a greater impact on Mexico’s digital banking system. We are excited to begin this process before regulators because we have the technological infrastructure to reach where traditional banking did not before and expand our reach to offer more innovative and accessible products,” Rivas added.

The company does not have a banking license in the other countries where it operates and does not seek to have one because it can provide the desired services under the current frameworks.   

Currently, Mercado Pago offers debit and credit cards, daily returns on the balance available in your digital account, personal loans and financing to SMEs, and the option of receiving remittances.

The license would allow it to expand its product portfolio, in addition to attracting resources from the public through checking accounts, savings accounts or fixed-term deposits, to later place them in credit operations such as commercial loans, mortgages and others.

In February, Iupana, a media company specializing in fintech in Latin America, announced that Mercado Pago was evaluating becoming a bank.

In Argentina, Mercado Libre is registered with the BCRA but does not have authorization to raise and intermediate funds from the public. However, since 2016, it has collected funds from the public through its payment accounts, then deposited them in different banks or transferred them to the capital market through Common Investment Funds.

Founded in 2003, Mercado Pago operates in Argentina, Brazil, Chile, Colombia, Mexico, Peru and Uruguay and processes more than 15 million daily transactions.  

Source: Translated from La Cronista

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