Mercado Libre is an e-commerce provider from South America with a strong fintech game. And it is now making an unusual move, which makes a lot of sense for them and their users. For those of you who have not heard about Mercado Libre before, it is an Argentine company headquartered in Uruguay that operates in 17 countries, including a strong footprint in Brazil and Argentina. I had actually covered Mercado Libre in 2023, when I took a closer look at their income statement and showed that the company is making 44% of their revenue with fintech products. Now it adds one more financial product: stablecoin.
Even without specific knowledge about Mercado Libre, you will be aware of the challenges facing consumers in many South American countries arising from the high inflation. Whenever possible, locals tried to avoid the local currency and rather chose US-Dollars or other “stable” currencies that were not losing a lot of value every day. Stablecoins are a perfect product to address these needs, and that a non-financial brand like Mercado Libre is launching such a product is interesting for two reasons. Firstly, consumers can get stablecoins from various providers. Especially in countries with high inflation rates. The Brazilian Nubank announced such a product offering last year. You could argue that consumers facing such challenges will go out of their way to find such products, and it is likely true. Nevertheless, a provider like Mercado Libre is able to attract a lot more customers, and probably even the usage per customer is higher compared to a stand-alone solution. Secondly, this is a great opportunity for Mercado Libre. They announced that they would waive the transaction fees, likely aiming to increase adoption quickly. Making money from this transaction fee is not irrelevant; however, the impact on Mercado Libre’s core business could be even more relevant. If a consumer has stored her funds at the e-commerce giant, where would she go if a new purchase had to be made?
