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ECONOMY | 26-09-2023 11:23

Argentina Central Bank move slammed as ‘attack’ by Mercado Pago

Technical measure by Argentina’s Central Bank provokes rare public rebuke by fintech arm of MercadoLibre.

A technical measure by Argentina’s Central Bank Monday provoked a rare public rebuke by the fintech arm of MercadoLibre Inc, another sign of the government’s damaged relations with private business.

Mercado Pago, the payments and wallet platform run by the Latin America e-commerce giant, warned that the Central Bank’s decision to separate platforms between debit payments and transfers means “more than four million people are going to have challenges adding money to their digital Mercado Pago account.” 

“This measure is a new attack against financial inclusion,” Mercado Pago said in a post on the social media platform X, formerly known as Twitter, adding that traditional brick and mortar banks pushed the monetary authority to impose the new system. “It’s going to negatively affect millions of people.”

It marks another episode of the ruling Peronist government’s slew of anti-business measures since it took office in 2019, including a cobweb of currency controls and even a failed attempt to nationalize a soy company. Facing presidential elections on October 22, the government is struggling to stay in office after it finished third in an August primary vote. 

Over eight million users invest in mutual funds in Argentina via the Mercado Pago wallet app — nearly 20 percent of the entire population — and, as of early July, held over 367 billion pesos (US$1.4 billion at the time), according to MercadoLibre CEO Marcos Galperín, who reposted the information on the platform X. That’s up from three million accounts in June of 2021. 

For the past three years, Mercado Pago has used the “immediate debit” or DEBIN system for users to send money to their accounts. Now the Central Bank — saying it wants to avoid fraud cases — intends to make the DEBIN system for payments while putting transfers through another channel called “pull transfers.” 

Mercado Pago says test trials of the pull transfer system have caused failures for nine of ten users, causing some users to even go to an ATM to confirm their identity. 

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by Patrick Gillespie, Bloomberg

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