LatAm’s Mercado Libre plows ahead with 50M fintech clients

The leading e-commerce business in Latin America continues to expand aggressively into fintech. The company is edging closer to 50 million active clients for its digital bank, Mercado Pago, earning its place as one of the leading neobank businesses across the region.

Osvaldo Gimenez, Fintech President at Mercado Libre.

Despite challenges like high-interest rates and sluggish GDP growth in Latin American economies, the Buenos Aires-based firm, one of the region’s largest publicly-traded companies, boasted 49 million active fintech users in the first quarter of 2024.

With significant digitalization catch-up opportunities in the region, endeavours like Mercado Pago are poised for above-average growth rates. Its fintech clientele has surged by over 13 million in the past year, up nearly 40% from 35.6 million a year before. The company defines active users as those who have conducted at least one financial transaction within the last 30 days.

High-yield accounts a must for Mercado Libre, Latam fintechs

Mercado Pago’s fintech net revenues, meanwhile, expanded 74% year over year from the same quarter last year to $1.8 billion. However, they dipped slightly from the previous three-month when the company booked $1.9 billion.

The digital bank noted that while all countries showed significant growth, it was strongest in Brazil, the region’s largest economy and the greatest source of revenue for the once-Argentinian company. Its growth there has been boosted by a jump in assets under management, fueled by the introduction of a new account, “Cuenta Turbinada”, a high-yield account which according to the company offers the highest rate for depositors among its competitors.

The strategy of high-yielding accounts, pursued by neobanks across Latin America, has proven successful for fintechs, with deposits increasing as bank customers seeking higher returns turn to these digital platforms. Assets under management in Latin America as a whole jumped to $5.5 billion from $2.9 billion in the year-ago quarter.

Expanding into Latin America’s affluent segment

Expanding its reach into the high-income segment, Mercado Pago is banking on its recently launched credit card to tap into this lucrative market in Brazil and across the region. In Brazil, Nubank, a key competitor, has likewise prioritized targeting wealthier clients with a tailored product called Nu UltraViolet, signalling a strategic move towards enhancing profitability among this demographic.

“The Mercado Pago credit card is strategically important as it expands the addressable market of our fintech platform by catering to higher-income demographics,” the company said in a letter to shareholders. In the quarter, it issued some 1.5 million new cards in Brazil and Mexico.

The company’s net profits—including its large e-commerce business—grew over 70% to $344 million in the period, compared to $201 million in the year-ago quarter. They also surpassed the $165 million mark from the fourth quarter of 2023, when the company reported a one-off tax impact that weighted negatively on its shares.

  • David Feliba

    David is a Latin American journalist. He reports regularly on the region for global news organizations such as The Washington Post, The New York Times, The Financial Times, and Americas Quarterly.

    He has worked for S&P Global Market Intelligence as a LatAm financial reporter and has built expertise on fintech and market trends in the region.

    He lives in Buenos Aires.