- MercadoLibre accused the Argentinian banks of “illegal concentration” on a payment platform to compete against the company’s fintech arm.
- The 36 banks involved in the MODO wallet have formed a cartel to avoid competition among their own digital wallets.
OUR TAKE
Founded in 1999, MercadoLibre is currently the most valuable public company in Latin America with a market capitalisation of $101.4 billion. While it started as an e-commerce platform, its payments and financial services segment has grown to account for more than 40% of revenue.
–Zora Lin, BTW reporter
What happened
MercadoLibre accused Argentine banks of “illegal concentration” on a payment platform in an anti-competitive tactic targeting the company’s fintech arm on Monday.
Latin America’s largest company by market value filed a legal complaint with Argentina’s National Commission in Defense of Competition. The move follows a legal complaint filed in May by a group of banks under the Argentinean banking sharing platform MODO, alleging similar anti-competitive tactics by a subsidiary of Mercado Pago.
Although Mercado Pago claims that 80% of deposits in Argentina’s financial system are held by the 36 banks backing MODO, the banks say Mercado Pago accounts for 80% of e-commerce retail sales in South America’s second-largest country. The 36 banks involved in the MODO wallet have formed a cartel to avoid competition among their own digital wallets.
In a statement Monday, MercadoLibre accused the banks of “a coordinated approach that is bound to hurt the fintech industry and its users. There is no need for MODO to transfer money in Argentina.” MODO has a different goal: to coordinate commercial distribution channels in order to escape competition.
Also read: MercadoLibre’s fintech division launches dollar-backed stablecoin Meli Dolar
Also read: Argentina regulates $85B crypto market amid laundering concerns
Why it’s important
MercadoLibre’s case against Argentine banks sheds light on competition and antitrust issues between emerging platforms and traditional banks in the fintech space, as well as the potential harm to the industry and consumers caused by anti-competitive practices.
This is the latest sign of tension between emerging fintech platforms and traditional banks, reflecting the challenges and controversies that a cash-dependent economy faces as it transitions to a digital economy.
MercadoLibre’s statement highlights consumer choice in digital payment options and the potential impact of avoiding monopolies on consumer interests.
