When Marcos Galperín founded Mercado Libre in the late 1990s, he probably did not imagine that what started as a local platform designed to fight the leadership of the very incipient electronic commerce in the country would become, 20 years later, the most important company in the world. valuable from Argentina and the spearhead of the Fintech revolution in the southern cone.
Two decades are equivalent to centuries within the limits of the Internet: what is now the latest fad of fashion can be obsolete in a matter of weeks.
The company may know better than anyone else in the industry: if at the dawn of the new millennium the business was in the online classifieds of used items, in 2019 it finds them increasingly consolidated as the number one player in online payments of the region.
Mercado Pago, which was born as an ad-hoc solution to manage transactions within Mercado Libre, evolved over the years into an independent platform capable of processing all types of charges via the web or from the cell phone, for countless shops mounted on the Internet.
Consolidated the proposal, the "unicorn" commanded by Galperin began an aggressive expansion plan for its financial branch, since, he assumes, will be the axis on which turn their future: sooner or later, Amazon will reach the region.
Therefore, reducing dependence on your eCommerce business and supporting its "transactional" branch has been a fundamental move to strengthen itself for the next decade.
Much of the management of this powerful division falls on the shoulders of María Paula Arregui, Product SVP of Mercado Pago.
In dialogue with iProUP, the executive assures that the current objective is "to achieve a proposal of complete financial solutions, available to many people who did not have or do not have access to the world of traditional finance".
The numbers and the scope of the new products seem to confirm this.
2018, the consolidation
What was done by Mercado Pago in 2018 strengthened its business, both online and offline. Arregui separates it into three big ads.
"One was the prepaid card, which today works by mirroring the digital balance that people have in their account, one can go to the supermarket and make purchases using the digital account, go to an ATM and withdraw the balance physically or even , access services such as Cabify, Netflix and Spotify, in which you need a card yes or yes. "
The product, launched in Argentina in February of last year and in Brazil at the end of 2017, already accumulates more than a million cards issued and activated in a large proportion, according to the executive.
The second great proposal of 2018 was the official launch of the payment platform via QR. For Arregui, "it was a product that allowed us to penetrate and access the physical world, reaching more than 260,000 businesses that already have their printed code and available to customers."
The figures speak for themselves: Mercado Pago registered 3 million transactions processed through this route only in 2018.
In this regard, María Paula reveals the secrets of her success. "We think of it with many benefits: for the merchant we are offering the availability of funds instantly for debit card payments, the same happens when the payment is made with money that is hosted in Mercado Pago," he explains to iProUP.
The advantages, he says, do not end there. Contrary to what happens with the popular posnets, "the QR has no maintenance cost of the device and can be generated free of charge by any merchant who wants to offer it".
On the side of consumers, the company faced an ambitious discount plan, which worked as hooks so that the user has the incentive to try the service for the first time, know the experience and recommend it to their friends.
The advent of QR as the main point of contact with physical commerce allowed Mercado Pago to advance its idea that the app, sooner or later, replace the wallets of millions of users.
In that line, it also allows you to recharge your cell phone, the SUBE, Starbucks cards and pay service bills from your smartphone.
Finally, the third major launch that highlights Arregui is the investment fund launched in September, "a spectacular complement to the digital wallet, because while you are not using the money you have in your account, it pays interest all the time."
With a return of 40.7% per annum, the fund can be launched from $ 2 that have the balance in Mercado Pago.
"It is a fund that does not penalize you when you leave, which means that you save, generate and earn your interest and, at the time you want to withdraw the money, use it to consume without being penalized," explains the specialist.
In this way, all new money that enters the account is automatically reinvested and generates interest.
The project was carried out together with the BIND, which provided the regulatory leg and approvals that this type of product needs. Mercado Pago, for its part, was in charge of adding digital expertise and access to millions of users across the country.
"We added many people who, we felt, did not have financial education until now to access investments in this type of instruments", reveals María Paula.
Today, the average investment is $ 8,000. In what goes from the beginning of the project until January 13, the fund registered a volume exceeding one trillion pesos invested and 150,000 people have joined.
"According to the CNV, in Argentina last year there were 400,000 accounts, in just a few months, to be able to create 150,000 new ones is proportionally a lot," the executive celebrates.
Round business
The relationship of forces within the Galperín company is changing. As a student that exceeds its teacher, the financial branch that was born under the wing of the once almighty division of eCommerce today is positioned as its main business for the future.
Arregui is clear about this: "Today, Mercado Pago is already bigger than Mercado Libre eCommerce, we serve it in its payment processing needs, as well as any website in the region that wants to use our platform on its own page" , he says.
"And now, to the physical world, through the possibility of acting in the terrain of transactional transaction, person to person, or trade to person, the absolute is, in this sense, greater," he adds.
There is no doubt, the future of the company has a fintech flavor: only in 2018, the division registered 336.8 million operations, which represented a 64% annual growth.
Regarding the money transacted by its users, the number overwhelms: u $ s17.5 billion - adding the operations in Argentina and Brazil - which meant an increase of 48% with respect to 2017.
Although the world moves more and more to a universe enclosed in smartphones and laptops, from the company they believe that there is still a huge market to take advantage of in the physical environment.
Products such as QR payments or mobile POS are among the fastest growing. It is clear, at the end of that rainbow there can be a real gold mine.
"When we talk about e-commerce, if one seeks to reflect how much it represents in transactions in the retail segment, today it is around 4% to 6%, depending on the market." The physical world is, in this sense, the one that opens doors to a universe that for us is huge, "says Arregui.
Of the hundreds of thousands of businesses that today have joined the QR phenomenon, the vast majority correspond to small and medium business ventures.
It is common to find them at fairs, on the beach and in many other scenarios where before cash was the only possible exchange to finalize a transaction. Even its impact is in Chinese self-services, where, according to the directive, "we are penetrating with an impressive force, they are among those that help us the most to evangelize".
The products available on the market today still have a lot to grow. However, the company already looks at other technologies to add in the coming years.
One of them is NFC, which allows wireless or contactless payments, and does not stop growing globally.
"All the time we are seeing what new things are coming in. Regarding the NFC, we are looking at it very closely: on the one hand, with our prepaid card, which at some point will become contactless, although it will not be overnight" , reveals Arregui.
He adds that "it is a technology that we could use to tokenize our wallet, just as today the payment is triggered when one scans the QR code, nothing prevents tomorrow that payment can be made by approaching the cell phone to a reader".
In short, what they seek is "to consolidate the evolution in the way of paying, with more happy users and included in these proposals".
Banks: allies, not competitors
The question is inevitable. With such a wide range of financial solutions and more and more money circulating within the platform, will Mercado Libre transform Mercado Pago into a full-fledged bank?
For Arregui, the idea is, for now, far. "I think that in Argentina, today, we are more comfortable with our position of associating with banks, instead of becoming one, basically, so that each one can bring their biggest and best 'expertise' to the products we want to launch. ", details iProUP.
In this regard, he emphasizes: "Today we prefer to remain in what we know how to do and look for partners that share with us this vision of inclusion, of digitalization." The idea that the cell phone held by Argentines should be a huge source of access to products that previously They seemed unviable. "
According to the SVP, this strategy allows them as a company to move faster and not defocus efforts on what they already know how to do. "It's an equation that we're comfortable with today, looking for joint ventures with banks instead of becoming one of them," he argues.
Although the plans related to the transformation into a banking entity are, for now, a mere remote possibility, Mercado Pago has a master plan to permanently consolidate its financial offer in the country: salaries.
The regulatory framework that allowed the use of CVU (Uniform Virtual Key) in Argentina last year was the last step for fintech to expand its business. Strictly speaking, it is a key assigned to digital wallets so that they can become interoperable with bank accounts.
"Within this regulation, in addition to the interoperability between virtual account and bank account, there are many new aspects, such as the possibility of paying salaries in digital, which of course both us and any other fintech allows us to think of new possibilities for continue to advance on the path of inclusion and serve people more efficiently, "says Arregui.
Include the payment of salaries in Mercado Pago is, in broad strokes, the strawberry of the dessert for a platform of these characteristics. Having the user's money not only expands the possibility of using all its offline and online payments, but also adds a wide range of products available to its customers:
"If we could receive in our accounts the payment of salaries, people could have an account without creation, access or maintenance, in which we basically give a prepaid card so that it can mirror its balance in the physical world," he says.
And complete: "Thus, as you start to consume and leave a trace of your expenses we can offer you a line of credits and you can invest this salary on day one and receive a return to 40% per year without the need to immobilize that money in a fixed term, or lose performance if you need to use it. "
For Arregui it is clear: "Through the payment of salaries is where we will be able to squeeze and give a spectacular benefit to people who want to approach the digital world to manage their finances".
For a company that bets little on futurology, the enormous success of Mercado Pago means simply one more step of a roadmap that they have known how to respect to the letter.
Looking ahead to 2019, the panorama looks promising: without threats in sight and with the shadow of Amazon for now far from the horizon, those led by Galperín move calmly in the waters of electronic commerce, while they have everything to gain in the expansive market fintech
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