Mercado Pago Soars In Mexico With Expanding Card Reader Adoption

What’s going on here?

Mercado Pago, the fintech arm of MercadoLibre, has seen a surge in the adoption of its mobile credit card readers in Mexico, more than doubling over the past year.

What does this mean?

Mexico might be the second-largest economy in Latin America, but it’s still far behind Brazil in digitalization, with cash reigning supreme. Yet, Mercado Pago’s compact, affordable readers have outpaced offerings from traditional banks and local rival Clip. There were 2 million credit card readers in Mexico five years ago; now there are over 4 million, largely due to third-party providers like Mercado Pago. The growth rate of their readers has hit ‘low triple digits’ in the past year, says their head of financing in Mexico. At just 149 pesos ($8.07) apiece, these devices are an easy snag online, boosting small business capabilities.

Why should I care?

For markets: Tech outstrips tradition.

As Mercado Pago’s card readers dominate, the stagnation of traditional bank-provided devices highlights a significant shift. This fintech-driven boom signals a potential transformation in Mexico’s payment landscape. Investors should monitor this transition closely for emerging opportunities and risks.

The bigger picture: Mexico’s fintech growth on the rise.

Mercado Pago isn’t stopping at card readers. They’re extending their financial services portfolio with loans, credit and debit cards, and international transfers. Last year alone, they approved over 1 million small-business loans and aim to surpass 2 million in 2024. With plans to apply for a banking license to offer savings accounts, CDs, commercial loans, and mortgages, Mercado Pago is set to play a pivotal role in Mexico’s financial digitalization.