:quality(75)/cloudfront-us-east-1.images.arcpublishing.com/bloomberglinea/PPS7QB5OZBHPHHZGWPTRHPOCJY.jpg "A Mercado Livre distribution center: the company's fintech has expanded operations into the vehicle credit segment. Photographer: Jonne Roriz/Bloomberg.")
Bloomberg Línea — A credit crisis is causing concern in the Brazilian market, particularly following the crisis that engulfed retail giant Americanas (AMER3) after accountants discovered a 20-billion-reais ‘hole’ in its accounts on January 11.
And in March, Verde Asset, Luis Stuhlberger’s management company, warned about signs of a credit crunch in Brazil, which would lead banks to make it more difficult to procure loans, or reduce the number of loans to companies.
In the scenario for individuals, in January 2023, 70.1 million defaulters were registered in the country, a record, according to Serasa Experian.
For Tulio Oliveira, Senior VP of Mercado Pago in Brazil, however, the credit crisis has not extended to the financial arm of Mercado Livre (MELI34), which enabled it to make a greater investment in the sector for this year, contrary to the strategy of restricting concessions that most players have adopted.
“We are constantly monitoring the credit market. We didn’t suffer last year. Because we were more conservative last year, we feel more comfortable for the current scenario,” Oliveira said.
Of Mercado Pago’s total credit portfolio, 20% comes from credit cards, which corresponds to a volume of about $500 million.
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As part of the strategy revealed by the executive to deepen the company’s credit offering, Mercado Pago will now offer vehicle financing on Mercado Livre’s platform in the city of São Paulo, the largest market in the country. This is one of the most relevant segments for credit and with reduced risk given the instrument of fiduciary alienation, which allows the recovery of the car in case of default.
Smartphone as a payment device
Mercado Pago will also offer a function that will allow customers to use their smartphone as a card machine for payments. The product should, at some point, replace the cheapest machine offered by the digital bank, which costs about 11.50 reais ($2.30), according to Oliveira.
“We look at it as another growth channel. Today we subsidize part of the value of the payment for the machine. From the customer’s point of view, it is better because they already have a smartphone. We will test the model to see how the customer reacts - and we hope that, yes, at some point the [cheaper] machine will no longer be necessary,” said Oliveira.
He said the company is currently carrying out “tests” regarding the fees to be charged, but the idea “is to release the amount immediately to the customer”.
The mechanism will be called “point tap”.
Other companies, such as Nubank (NU), offer a similar product for customers with corporate accounts.
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