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Thursday, October 6, 2022

Mercado Libre filed an administrative appeal with the Central Bank

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At the moment, in Mercado Pago will wait for a response to the lawsuit filed while they wait for the Central Bank to review its position and summon them to dialogue. Meanwhile, they warn that there could be adverse effects on the fintech sector as the rule targets the heart of the business. They do not rule out the halting of investment plans and the creation of new jobs.

“This comes against what the BCRA had been doing for financial inclusion. Our activity allowed us to reduce the circulation of physical money and increase tax collection. And so we are concerned that there is no clear justification. This is not banks vs fintech, this regulation does not have clear reasons”, they pointed out from the company part of Mercado Libre.

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The Central Bank directory had arranged that financial entities must constitute a reserve of 100% of the funds deposited by virtual wallets (called payment service providers that offer payment accounts) “to preserve them from contingencies and ensure that they are always available to savers,” the monetary authority said in a statement.

The justification was that “these accounts are of a transactional nature and the proposed measure strengthens that role,” argued the BCRA. The provision, however, cuts off a source of income for fintech companies because “the banks gave them a return to have the funds in their institution”Ignacio Carballo, economist and specialist in the fintech ecosystem, explained to Ámbito.

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With this new rule, as of the first of this month, these funds must also remain immobilized in the BCRA, available to their holders. Therefore, they will no longer be able to generate interest.

Source From: Ambito

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