Latin America Braces Itself as E-com Giant MercadoLibre Drops Crypto Payments After Paypal Funding

While the world is looking at various means towards expanding on the potential of the blockchain and looks to incorporate it into their business, some are clearly not so enamored by the tech. It seems that e-commerce giant, MercadoLibre is one of those. In a recent email, they were found advising their userbase to move away from cryptocurrency-related listings as they will be banning them from their platform, shortly.

The Latin American giant has a noticeable hold in over a score of countries. And one could not help but notice the coincidence in the timing of the announcement, which comes just a few days after payment gateway behemoth, PayPal made an investment of over $700 million in the company.

$1.8 Billion Raised

The Argentinan company has been a major player in South America for a while now. However, its homogeny has been disturbed thanks mainly to the incursions made by Amazon. To counter this MercadoLibre has had to assess a number of key factors and consequently focused their attention on boosting investment in logistics. Apart from that there now a concerted effort to invest in fintech and offering better payment solutions.

As per sources, MercadoLibre raised in excess of a billion dollars in capital through a public share offering which was complemented by direct investments from other companies including PayPal. In a historical high, the e-commerce firm offered its common stock at a value of $480 a share. And at the time of sale, the value in fact raised to $500, before stabilizing back to $488. The stock offering also coincided with PayPal offering to make a strategic investment believed to be in the region of $750 million. Finally, another $100 million is expected to be raised via Dragoneer Investment Group, who are expected to purchase them as perpetual convertible preferred stock.

All this has made the investors happy, seeing the companies stock appreciate over the past several months. This presents a lot of opportunities for them, something not lost on MarcadoLibre’s chief marketing officer, Sean Summers. Talking about the direction he wants to steer them towards, he says there is a

“sense that Latin America is at a tipping point in terms of e-commerce growth.”

The idea is to funnel these resources into the main markets of Argentina, Brazil and Mexico to strengthen their base and build from there on.

In this endeavor, it has been clearly stated that PayPal won’t participate. They do not have a chair on the board and are certainly not expected to take an active role in the day-to-day operations. However, that doesn't mean that the money was invested in good faith alone. As Summers eloquently notes,

“This deal opens the door to communication channels between our operations teams. We’re going to identify collaboration areas, to understand how PayPal’s global know-how best complements MercadoLibre’s regional know-how.”

In essence, focussing all transactions via PayPal.

A Ban On Crypto Kisting, Bought At $700 Million?

E-commerce is a tricky business where customers trust is earned over years and lost in a single bad experience. Naturally, platforms across the globe have taken a safety first attitude and have been rather proactive in banning ads and products related to the crypto space. This has been done under the notion that there isn't enough government clarity and thus there is a high potential for fraud or illegal activities to occur as well as for the users own safety.

Thus, a recent communication by the company notes that they will be cracking down on pre-paid cards and digital currencies being used on their platform. They have asked the vendors with any listings related to cryptocurrencies or pre-paid cards for games to finalize their deals by next week when the ban will take effect.

This will undoubtedly have a major impact on the local market for cryptos. According to reports from Criptomoedas Fácil, Brazil alone has nearly 10,000 cryptos related listing, more than half of which are bitcoin-related. Ripple (XRP), reportedly the most popular cryptocurrency on the Latin American platform, boosts of similar numbers.

There has been no official statement as to the reason behind the e-commerce giants decision to drop all cryptocurrency-related listings. This volte-face seems even stranger when, most of last year, the company was working in conjunction with Ripio, a bitcoin wallet, and merchant processing service. The partnership was to allow the platform to offer their an option to withdraw and send funds directly in bitcoin.

MercadoLibre is clearly readying for a fight against other industry giants like Amazon. By offering innovation in payment methods, such as payments through QR codes or mobile devices, they are certainly taking a step in the right direction. Yet distancing themselves from emerging tech such as blockchain seems counterintuitive. At the same time, this is to be expected. While there has been no clear link to show PayPal being directly involved in the decision to bar crypto sales, it doesn't need a philosopher to deduce that given bitcoins “potentially disruptive” nature, there might be 700 million reasons to stop its use.

Get Daily Headlines

Enter Best Email to Get Trending Crypto News & Bitcoin Market Updates

What to Know More?

Join Our Telegram Group to Receive Live Updates on The Latest Blockchain & Crypto News From Your Favorite Projects

Join Our Telegram

Stay Up to Date!

Join us on Twitter to Get The Latest Trading Signals, Blockchain News, and Daily Communication with Crypto Users!

Join Our Twitter

Add comment

E-mail is already registered on the site. Please use the Login form or enter another.

You entered an incorrect username or password

Sorry, you must be logged in to post a comment.
Bitcoin Exchange Guide