$180B Fintech Business!
Mercado Libre. More than Amazon! Equity Research! Part 2/3
Welcome to Part 2 of this Mercado Libre Deep Dive!
In the first part, we talked about how Mercado Libre built its e-commerce and logistics businesses. I recommend readers start with it. Today I will tell you how Mercado empowers the money to flow!
When a lack of great financial services slows down e-commerce adoption, it becomes a necessity to offer these services. This is how Mercado Pago was born. Pago is Mercado Libre’s financial platform. Its objective originally was to facilitate transactions on Mercado’s Marketplace, since then it has grown into a comprehensive financial services product.
1. Payment Processing
2. Digital Wallet
3. Loans
4. Mercado Libre Business Risks
5. Part 3
1. Payment Processing
It is not enough to have a great e-commerce marketplace and a reliable logistics service, for e-commerce adoption to continue increasing customers must be able to easily pay for their purchases and have trust in the safety and reliability of the transaction. Mercado understood this early on and developed their in-house payment processing capabilities.
“Through Mercado Pago, we brought trust to the merchant customer relationship, allowing online consumers to shop easily and safely, while giving them the confidence to share sensitive personal and financial data with us.” Mercado Libre 2023 10K
Payment processing is paramount in delivering a great user experience!
If customers experience difficulties when paying, they are less likely to return. Moreover, customers are fickle and can change their minds easily. Therefore, offering many payment methods is extremely important to reduce the likelihood of a customer abandoning the sale during checkout.
What started as an internal payments processing tool has grown into a full-service product that facilitates online and offline transactions through points of sale terminals, mobile phone payments, QR code payments, and credit card, and debit card payments.
$1.2B of Mercado marketplace