The news: Goldman Sachs has loaned $233 million to Latin American online marketplace Mercado Libre as the ecommerce heavyweight looks to grow its financial services presence in the region.
The fintech arm of the company Mercado Pago plans to use $106 million to expand its credit portfolio in Brazil, while setting aside $127 million for its Mexican operations.
Shaking up LATAM banking: Sometimes dubbed the “Amazon of Latin America,” Mercado Libre already generates huge sales and boasts a vast active user base of over 80 million, mainly from its ecommerce operations. Now it’s targeting financial services growth.
- Last week, it partnered with Western Union on US-Mexico remittances.
- And Citi loaned the firm $375 million in November to grow its credit arm in Brazil and Mexico.
These investors see Mercado Libre’s growth potential determined by whether it can harness its regional retail success and use it to build its finance arm.
Mercado Pago is already one of the most lucrative parts of the company’s wider business and has successfully picked up customers by attempting to democratize finance for the millions of underbanked Latin Americans.
This is, however, an increasingly competitive space that already contains neobanks like Nubank and Revolut, fintechs such as Creditas and Inter, and incumbents including Santander and Banco do Brasil.