MercadoLibre’s FinTech Offerings Bring TPV Surge In Q4

MercadoLibre has revealed strong growth in the last quarter of 2019—due in large part to its FinTech offerings.

The company’s Q4 financial report showed that its total payment volume (TPV) surged to $8.7 billion—a 63.5 percent year-over-year (YOY) increase when translated to U.S. dollars, and a whopping 99 percent boost in local currencies. In addition, its total number of payment transactions increased 127 percent YOY to 285.5 million.

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“We are proud to announce the fourth quarter 2019 with a sustained momentum that gives us the confidence to move on to a phase of continuing to prioritize growth, but with a greater focus on driving cost efficiencies and scale benefits through the P&Ls of our larger more consolidated businesses,” said Pedro Arnt, Chief Financial Officer of MercadoLibre.

The company’s payment platform, Mercado Pago, has become popular with both online and brick-and-mortar retailers, but its off-platform business was the biggest contributor to MercadoLibre’s impressive report. It accounted for 78 percent of its TPV growth, as well as 55 percent of the total payments in the fourth quarter. It also generated growth of 121 percent, or 176 percent YOY in local currencies.

Its mobile wallet also hit a milestone, surpassing the one billion mark for the first time, generating $1.3 billion in transactions for the quarter on a consolidated basis. Its consumer base grew by 29.4 percent compared to the third quarter, reaching 7.9 million active payers, while TPV in Argentina, Brazil and Mexico has been growing by triple digits year-over-year.

And Mercado Fondo, the company’s asset management product that comes with a full suite of FinTech solutions, has invested almost 90 percent and 60 percent of customer funds in Mercado Pago in Brazil and Argentina, respectively.

This is all impressive given the fact that Latin America has historically been a cash-based society, with an estimated 70 percent of residents considered unbanked or underbanked. MercadoLibre tackled that by building a network of retail locations so that customers can easily add money to their Mercado Pago account.

So it’s not surprising that the company has attracted the attention of PayPal, which agreed last March to make a $750 million investment in the company by purchasing common stock. A few months later, PayPal announced an expansion of the partnership, allowing Brazil- and Mexico-based users of Mercado Pago to use PayPal for online checkout at merchants integrated with the digital payment technology.