Monday, June 17, 2024

Digital payment giant Mercado Pago enters cryptocurrency market in Mexico

Cryptocurrencies are not experiencing their best times these days. FTX, one of the biggest crypto exchanges, announced last week it would initiate bankruptcy proceedings in the United States, “triggering a potentially massive meltdown in the industry,” wrote Reuters.

But this hasn’t discouraged Mercado Pago, the online payment platform owned by Argentina-based Mercado Libre that wants to be the go-to source for Mexicans interested in getting into cryptocurrency.

In an interview this week in Forbes México, Pedro Rivas, the director of Mercado Pago, said his Paypal-like service already has 150,000 cryptocurrency users in Mexico, and now wants to reach the 1 million mark it has obtained in Brazil in only a few months.

“Mercado Pago has the intention of democratizing financial products for everyone — and one of the most relevant in recent years has been cryptocurrencies,” Rivas said. “The simpler we make it, the easier it will be for people to try this product.”

A promotional image from Mercado Pago México, showing a street vendor who accepts payment via their platform. Mercado Pago México Twitter

Rivas said users of the Mercado Pago app can “buy a bitcoin or sell a bitcoin in less than 10 seconds.”

When asked by Forbes México why Mercado Pago is ramping up its involvement in crypto at this time, Rivas replied, “Why not?”

“The future of money is not going to be cash,” he added. “In more advanced economies, it has ceased to be relevant. … Electronic money has many advantages over physical money, and one of the versions of this are cryptocurrencies.”

Rivas noted that approximately 1 million users in Brazil have bought some amount of Mercado Coin, a blockchain-based cryptocurrency developed in partnership with Argentine fintech and crypto specialist Ripio, since Mercado Pago introduced the service in August. Now he’s looking for a similar bump in Mexico as the e-commerce platform proceeds with its gradual rollout.

With 5 million people in Mexico using Mercado Pago as of 2021, according to ComScore data cited by Forbes México, Rivas said his company is in a good position to gain a significant share of the cryptocurrency market here. Around 12 million Mexicans already have some cryptocurrency, Rivas added.

Mercado Pago, reportedly the largest online payment platform in Latin America, allows users to send and receive money via multiple means — such as when purchasing products online. It is a subsidiary of Mercado Libre, an online marketplace of new and used products founded in 1999 that operates in 18 Latin American countries.

By next month or early 2023, people will be able to use Mercado Coins to transfer funds to others within the Mercado Libre ecosystem. Going forward, Mercado Libre will accept Mercado Coins as payment for products, and will use them for refunds or cashback in its loyalty program.

Technically, a Mercado Coin (worth about 2 pesos initially) is an Ethereum ERC-20 token. Ethereum is a blockchain that issues Ethers, one of which was worth 23,312 pesos (US $1,207) as of Wednesday morning, significantly below its Nov. 12, 2021 high of 95,306 pesos (US $4,644 at that time).

Rivas noted that although cryptocurrencies have been very volatile — and that everyone who enters the game should know that — Mercado Coin and other digital currencies will be part of everyone’s life in the future.

“We believe that it is a relevant product, that it is easy,” Rivas said. “I very much doubt that we will not reach a million users [of Mercado Coin in Mexico] in the not too distant future.”

As of right now, Bitso is said to be the top cryptocurrency platform in Mexico, with more than 6 million clients in Mexico, Argentina, Colombia and Brazil, according to a recent report in the newspaper Milenio. Allowing for the buying, selling, storage and usage of Bitcoin or 46 other cryptocurrencies in one place, Bitso was founded in Mexico City in 2014, has doubled its business in the last year and is getting ready to launch the “Bitso Card” in Mexico, Milenio reported.

With reports from Forbes México, Milenio and La Republica

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