Mercado Libre plans to acquire a bank in Mexico, but why not do it in Argentina?

Free market is studying applying for a banking license in Mexico to comply with the regulations imposed by the Government of that country where, until now, it was operating in that country with a license fintech known as IFPE, which allows it to offer a number of services, including the wallet application.

The decision of the company he runs Marcos Galperin This is because you are not authorized to lend and for which you need a banking license, such as receiving payroll deposits and the elimination of a limit on withheld amounts. Also, because the credit card approval and issuance process It would also be faster with that license.

However, in the other countries where it operates does not have a banking license and does not seek to have it because it can provide the desired services under the current frameworks. This was explained by the company recently. One of those markets is Argentina, where, according to a source specialized in financial regulation, Ambit“Payment Market is registered as a payment service provider (PSP) and as a card issuer with the Central Bank (BCRA).

What the license allows you to do in Mercado Libre México and in Argentina

That enables various financial operations to be carried out for its clients, but it does not allow it to carry out financial intermediation, which banks and Alycs can do. Mercado Libre is registered in the BCRA but does not have authorization to raise and intermediate funds from the public. You could not do it without a Financial Entity License according to Law 21,526.

“Intermediating means lending the money from the deposits. And that doesn’t do it. The BCRA always took care not to cross that line and, therefore, makes loans with its own funds,” details a market source in this regard.

To which another specialized voice indicates that “A PSP can enable a user to invest their money in a common investment fund (FCI) associated with the company, it is the money market, so it does not capture deposits since you can have the money instantly, which means that it is not a deposit.” Likewise, they cannot have floating money, if there is capital that It did not go to a fund, they have the obligation to invest that money in their own account.

This is the place of Mercado Pago in the local financial system and The banking entities consider that there are certain irregularities in the operations carried out according to the Financial Institutions Law. However, a source from the financial technology sector indicates that “it is common that, as they consolidate in the different markets, companies that are born as fintech acquire a banking license over time, so it’s a natural path.

From fintech to bank: a journey that many have taken

Recognize that Mexico is a country that has much more complex regulations than others for licenses as payment operators.. There is a fairly strong discussion about whether there are many obstacles to the evolution of technology and innovation with so many regulatory requirements.

“That’s why, perhaps, Making the leap from being a fintech to a bank is not so difficult because they already comply with many regulations that apply to banks,” he points out. Meanwhile, in the case of Argentina, he explains that “it is not the most important market for them and they prioritize others, such as Mexico, and on the other hand, with the license that they have today can operate the services they want.

Consider that, maybe it’s a timing issue and that, surely in the future, they will also obtain a banking license in our country. Likewise, it does not rule out that, with the current government management, they will recover some of the business they lost with the previous one. “Pre Fernandez, Mercado Libre could have paid accounts in banks and could have received salaries in his accounts. The latter may end up coming out,” she anticipates.

So, does not rule out that, going forward, Mercado Libre obtains a banking license in Argentina also. Everything will depend on how the market evolves, the restrictions you find in the market and the services you want to provide. “For a monster like Mercado Libre it is a matter of time,” she points out.

The case of Ualá, a pioneer in the Mercado Libre journey

One of the companies that has made this journey is Ualá. The company “operates in Argentina, Mexico and Colombia, and has regulated entities in each of these countries.” They told Ámbito that their business model is “disruptive” and highlighted that “we combine the best of both worlds: technological innovation with banking solidity.”

“We are pioneers in being a company of technological origin that has obtained banking licenses. The BCRA authorized the acquisition of 100% of the shares of Wilobank in 2022, now known as Uilo, the country’s first digital bank. For its part, the National Banking and Securities Commission of Mexico (CNBV), with the support of the Bank of Mexico (Banxico), approved the acquisition of the ABC Capital bank in 2023. In Colombia, we start in 2022 as a Financing Company,” they say.

In Mexico, Ualá has one of the 50 banking licenses in the country. This guarantees that our users’ money is protected by the Institute for the Protection of Bank Savings (IPAB), with insurance of approximately 3 million Mexican pesos, a sum significantly higher than the guarantee offered by SOFIPOs in the country.

That allows you to have one of the most competitive rates on the market, with a return of 15% on the account balance and offering the possibility of receiving the payroll directly in the application, thanks to the portability service. Also, with credit and debit cards, personal loans, payment of services, airtime recharges, remittances and much more.

For the company, The fact that Mercado Libre has decided to take a similar path is positive. “That other market players adopt this approach validates our model,” they say in Ualá.