Mercado Pago, a Latin American fintech, has announced its partnership with Paxos, and the partnership is targeted at enabling its users in Brazil to trade and hold cryptocurrencies directly in the same app they are using to make payments.
Initially, the app will support Bitcoin, Ethereum, and the Paxos Dollar Stablecoin pegged to the US Dollar, and Paxos will be the custodian of the cryptocurrencies.
The Brazilian users will be getting the incremental feature rollout this month from the Mercado Pago, and it will be starting with its employees. The users will be having access immediately to the cryptocurrencies on the app if they wish to use them without the requirement of an extra task. It was, however, stated that by the end of the month, all the users in Brazil will be having access to cryptocurrencies.
The CEO of Mercado Pago, Osvaldo Gimenez, stated in an interview with The Block that as of the end of the third quarter, the Mercado Pago had recorded an installed base of about 28 million wallets in Brazil. This means there are 28 million people than can start trading cryptocurrencies in Brazil without doing anything.
Gimenez said there are a few reasons why adding crypto to such payment app as Mercado Pago is significant. According to the CEO, one of the reasons is that having direct access to cryptocurrency on a popular payment app will make the transition to crypto seamless as there is no need to source for crypto exchange to use. In addition, users of Mercado Pago can use their fiat currency balance to buy crypto, and they can do that with an amount as low as 1 Brazilian Real (approx. $0.18).
The CEO also pointed out the relevance of the integration of USDP, which is targeted at serving the population that couldn’t open a US Dollar bank account.
The original intention for launching Mercado Pago was to facilitate transactions on Mercado Libre, an online marketplace for selling and buying used and new goods which are operational in more than 18 countries. With time, more stores embraced the payment platform to process payments using their point-of-sale system and QR Codes set up.
The Head of Strategy at Paxos, Walter Hessert, said in an interview that the integration of stablecoins on a platform like Mercado Libre is quite thrilling because it is the manifestation of a new use case for the asset class, which is the payment for goods and services.
For now, users on Mercado Pago will have to convert/sell their crypto to fiat before paying for goods with their account balance on Mercado Libre or fund transactions on Pix, an instant payment system in Brazil.
While Mercado Pago is operational in different countries, including Chile, Mexico, Argentina, Peru, and Uruguay, the recent crypto rollout will be able for the Brazilian users, which have over 212 million population.