MEXICO CITY (Reuters) - MercadoLibre Inc, Latin America’s top e-commerce platform, is taking its latest step into the world of banking, saying on Wednesday that it would start allowing Mexican users of its e-wallet to earn interest on money saved in its app by year-end.
The move, which builds on an existing interest-bearing account available in MercadoLibre’s home market of Argentina, is the latest in a string of fintech efforts targeting people without bank accounts in Mexico and elsewhere.
MercadoLibre has been pushing into financial services in several markets, including Brazil, where the company has said it plans to offer loans, financial transfers and other services starting this year.
Currently, users of the company’s e-wallet, called MercadoPago, can transfer money from traditional bank accounts or via cash deposits at convenience stores into the app, storing a balance that can be used for online shopping as well as in physical stores.
Under the new service, users will be able to put a portion of their e-wallet savings into an investment fund.
“For those who have a bit of money saved in their e-wallet, this will offer a return,” David Geisen, MercadoLibre’s newly appointed Mexico director, said. He described it in part as an incentive to draw in people who are not part of the formal economy. He declined to provide further details ahead of the platform’s launch.
Numerous companies, and even Mexico’s government, are stepping up their game to develop alternatives to traditional banks, which for decades have shut out low-income Mexicans with pricey fees.
Despite the challenges of reaching people who work in the informal economy and rely heavily on cash, companies and investors are increasingly eyeing opportunity given the widespread use of mobile phones.
“We’re betting on financial inclusion... so that people can better participate in digital commerce,” Geisen said.
Reporting by Daina Beth Solomon; Editing by Leslie Adler