MercadoLibre obtains a banking license in Mexico

E-commerce retailer and financial technology company MercadoLibre have entered into talks with relevant authorities to obtain a banking license in Mexico.

The potential for expansion is significant, as evidenced by the significant progress in the availability of banking, electronic payments and the use of credit observed in Brazil over the last decade. MercadoLibre’s goal is to actively contribute to this progress in Mexico through the introduction of additional products. The licensing procedure is expected to take from 12 to 24 months, and although the company considered obtaining a banking license, it ultimately decided on this option.

Mexico has become a key market for financial services startups, where less than half of the population has bank accounts. Many fintech companies are applying for banking licenses to offer a comprehensive range of services. Notable examples include Argentina’s Ualá acquiring a license through its acquisition of ABC Capital, UK’s Revolut gaining a license in April, and Brazil’s Nubank formally applying for one. Additionally, as of this writing, four local companies are in the process of obtaining licenses.

MercadoLibre operates in Mexico under an IFPE fintech license, allowing it to provide various services, including a wallet application. A banking license would allow the company to accept payroll deposits, remove holding limits and streamline credit card approval and issuance processes.

MercadoLibre representatives emphasize the simplification of various operations, from granting loans to offering investment products, which is in line with the company’s ambition to become the leading digital bank in Latin America.

MercadoLibre’s future plans

MercadoLibre does not have a banking license in other operating countries and does not intend to obtain one because, according to contxto.com, it can provide the desired services within the existing framework. The company intends to create 8,200 new jobs in Mexico this year and allocate $2.5 billion to its operations in the country. Notable credit agreements have been concluded with Goldman Sachs Group Inc., Citigroup Inc. and JPMorgan Chase & Co. for approximately half of the loan period.

MercadoLibre officials expressed enthusiasm about the growth seen in Mexico, attributing it to the significant expansion seen in products, markets, payment options and lending services, which has spurred investment, office expansion and increased employment.