MercadoLibre’s antitrust clash with Argentina’s banks intensifies

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In a remote stretch of Argentina’s Patagonia, Sheriff Miguel Hernández isn’t just keeping the peace. He has also become the town’s online shopping expert. The sheriff on horseback purchases items online on behalf of his neighbors through his account on Mercado Pago, the digital wallet on Latin America’s leading e-commerce platform, MercadoLibreiMercadoLibreFounded in Argentina in 1999, MercadoLibre is an online marketplace that also owns Mercado Pago, a leading payment and financial services app in Mexico and Argentina.READ MORE.

Over 1,500 kilometers north, in the Andean town of El Rodeo, radio host Rodolfo Chávez has taken on a similar role. During his daily broadcast on the community radio, he hops on the mic to let listeners in the area know their orders have been delivered: “Lady González, your MercadoLibre package has arrived! Come and get it!”

For these isolated communities, far from the bustling capital of Buenos Aires, online shopping isn’t a luxury — it’s a vital resource that eliminates the need to travel to distant cities to stock up on essential goods. “People prefer their packages sent to the station because it’s faster that way,” Chávez said. “E-commerce solves so many of our problems.”

Now, that lifeline is on the line as MercadoLibre’s longstanding rivalry with a consortium of Argentine banks has erupted into a heated legal showdown. Both sides have filed high-stakes complaints against each other, turning this into one of the most complex cases the Argentine antitrust watchdog has faced in recent history. A ruling in the case could lead to major changes in MercadoLibre and the banks’ business models, potentially altering the availability of e-commerce services for entire communities across the region.

In May, MODO — a digital-wallet consortium created by 36 banks in 2020, which directly competes with Mercado Pago — filed a complaint accusing MercadoLibre of monopolizing the digital payments market. In August, the e-commerce titan fired back with a counter-complaint, alleging banks were “cartelizing” through MODO in a way that undermined fintech companies.

It “makes a lot of sense” for banks to team up against this growing threat, especially as branchless models become the norm and traditional banks grapple with hefty legacy costs, James Friedman, senior fintech analyst at the U.S.-based trading firm Susquehanna International, told Rest of World. “In the U.S., banks were losing volume to Venmo, so they created Zelle. At least [Argentine] banks are reacting.”

Often dubbed the “Amazon of Latin America,” MercadoLibre has come a long way from its early days in a Buenos Aires garage. Founded by Marcos Galperin, an Argentine entrepreneur, in 1999, MercadoLibre is now the largest publicly traded company on the continent, with nearly 70,000 employees and hundreds of millions of customers. Its valuation, with a market cap of $100 billion, now dwarfs that of all publicly traded banks in Argentina combined.

Mercado Pago introduced many Argentines to online banking. Initially, the wallet targeted financially excluded citizens, including micro-entrepreneurs with no formal records, who were largely ignored by banks. It has since expanded its ecosystem to include more complex services like insurance and credit. Today, Mercado Pago has 52 million fintech users across Argentina, Brazil, and Mexico.

There is no timeline for the Argentine antitrust commission’s ruling on the case between MercadoLibre and MODO but its decision could impact millions who use the highly popular digital services on a daily basis.

“What’s keeping banks on edge in Argentina is the sheer number of engaged users we have.”

“This isn’t just another ruling on the cement industry or liquid oxygen; we’re talking about the payments you’ll make at the butcher shop this very weekend,” Marcelo Celani, a competition law expert who is also an adviser to MODO, told Rest of World.

Latin America has historically lagged behind the West in financial inclusion, with nearly half the adult population still unbanked as of 2019. The rise of thousands of fintech companies has been transformative for the continent, with QR code payments, digital wallets, and online shopping commonplace across many Latin American cities.

While MercadoLibre is generally welcomed across the region, including in Mexico and Brazil, tensions on its home turf are running high.

“What’s keeping banks on edge in Argentina is the sheer number of engaged users we have,” Andrés Anavi, senior vice president of credit at MercadoLibre, told Rest of World. “Elsewhere, we’re building positive, more collaborative relationships with banks.”

In September, the company announced a $250 million investment from JPMorgan Chase to enhance its credit services in Mexico.

MercadoLibre’s fintech strategy following the success of its marketplace business is reminiscent of eBay and PayPal in their early days. Its fintech unit has been aggressively growing ever since, supporting checkout payments on its platform, and also as an offline tool for digital payments and in-store transactions.

MODO, which includes Santander, BBVA, and HSBC, emerged as a response from the banking sector to better compete with big tech companies’ encroachment into their stronghold. MODO has 5 million active users in Argentina, according to its CEO, Rafael Soto.

“The unique thing about Big Tech is that they’re present at numerous touchpoints in people’s lives,” Soto told Rest of World. “When you add financial touchpoints into the mix, they become incredibly powerful in driving usage recurrence, leaving traditional banks in the dust.”

The banking showdown is unfolding just as Argentina’s libertarian president, Javier Milei, strengthens ties with tech leaders worldwide, including U.S. billionaire Elon Musk. During a recent visit to MercadoLibre’s Buenos Aires headquarters, Milei warmly embraced Galperin and praised the company as “an example of the Argentina we desire and for which we work tirelessly day and night.”

Milei’s cabinet members have weighed in on the dispute. “I don’t like that banks are asking for regulation,” Federico Sturzenegger, Argentina’s Minister of Deregulation and a close adviser to Milei, said during an interview with TV channel LN+ in August. “MercadoLibre is not a monopoly. You can’t have a monopoly when there is competition.”

Argentina’s antitrust commission operates as an extension of its trade secretary, making its final decisions vulnerable to political influence, according to Celani. If the case is highly publicized and involves a significant economic player, a political component “is almost unavoidable,” he said.

In a country which is struggling with triple-digit inflation, and where traditional bank deposits have historically yielded no interest at all, MercadoLibre has shaken things up by making high-yield savings accounts widely available.

“It seems a bit petty to me that in a country like Argentina, we’re fighting between fintech and banks when the main opportunity lies in growing the pie,” said Anavi. “Argentina, by any metric — insurance penetration, investments, or credit — is far behind. There’s just a lot of green field for expansion.”

Still, pushback against MercadoLibre is growing. Retailers often grumble about “excessive fees” and a lack of genuine e-commerce competition in Argentina. A previous government-led initiative aimed at competing with MercadoLibre flopped, and while Amazon recently introduced $5 deliveries, its presence in Argentina is still nowhere as robust as in other Latin American marketplaces.

“What was once revolutionary has now become establishment,” Fabián Barros, president of Pago Tic, a local fintech competitor, told Rest of World, referring to MercadoLibre. “Banks aren’t exactly pushovers, but it feels like a David versus Goliath scenario — right now, they just don’t pose any real threat.”

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