The senior vice president of the commercial entity, Paula Arregui, indicated that they will evaluate the possibility of expanding services in the Uruguayan market.
Paula Arregui has been part of Mercado Pago for two decades and is currently the company's senior vice president.
She is Argentine and graduated with honors from the University of Buenos Aires with a degree in accounting and business administration. Mercado Pago has made inroads in Argentina into the insurance segment - with life insurance, work accident insurance, and theft or damage insurance - and also into loans for SMEs.
Arregui said that the company will evaluate before the end of the year the possibility of incorporating these segments into the services it offers in Uruguay.
He said that the company had a tense relationship with traditional financial institutions for many years, although he acknowledged that the passage of time had moderated tensions and both sides had identified themselves as active players in the industry.
Below is a summary of the interview that Arregui conducted with the Uruguayan newspaper El Observador .
- At what stage of expansion is Mercado Pago in Uruguay?
Last year we were able to obtain the IEDE license (electronic money issuing institutions), so we already have the license that regulates us locally and that is what will allow us to start thinking about how we continue to expand and bring more solutions to the Uruguayan market.
Today we have widely expanded digital payment tools so that people can sell on their own websites, on social networks, through WhatsApp.
There are many tools available, from very simple ones for people with less technological sophistication to very comprehensive ones for large companies that sell online.
We brought QR codes. We have 50,000 vendors charging with QR codes in Uruguay and almost 400,000 people are already paying with them.
The rest of the proposal, such as insurance policies and credit lines for SMEs, will be complemented and made available to the Uruguayan market.
They are solutions for SMEs and financial services for individuals. So now with the license it is possible, before it was more difficult.
- Did you encounter any administrative obstacles in obtaining permission to operate as an electronic money issuing institution?
What we have found in many markets in the region - where the financial world has the particularity of being concentrated in a few players, in more traditional players, not very open to change - is that figures like Mercado Pago have brought a bit of disruption, innovation, shaking up the status quo.
So what we begin to develop at the end of the day is competition, it is more value proposition for the end user.
- Is there a planned date for implementing these two services?
This month we are working on defining priorities for next year, so we will surely be putting several of those priorities on the table to evaluate new things for Uruguay.
- Do you see Uruguay as a dynamic market with potential for the QR payment system?
We see it as very dynamic. The QR code is a product with a network effect. You need the critical mass of supply and then the mass of payers. If you don't get supply and demand to meet, you will fail. Many people want to pay and can't find where.
Or the other way around, they have the QR codes in place but if no one comes they will take them out. And I think that the good thing about Uruguay is that Montevideo concentrates a large part of the supply and demand in a relatively close territory.
Everything is within reach. This has shown us that we were able to make this network effect work very well. As with everything afterwards, we have to see how we can continue to take it to the interior and also make it grow. But the growth in Montevideo has been very fast and very dynamic.
- What are the main threats you see globally for QR payments?
What we have seen is an opportunity rather than a threat. The opportunity is that it is a very easy tool to implement, very cheap, and has no cost. We generate the QR code on the same screen of the seller's cell phone or device.
You can even print it out very simply and show it to collect payment. Of course, as with every innovation round, you have to take security measures; more education than security.
What things do we incorporate, for example? That the payment makes a noise when it passes through our QR codes. The seller can hear it, and can interpret that the payment is being made at that moment. Having real-time online monitoring tools.
We do not see cyber fraud as a threat. Mercado Pago has a buyer and seller protection program.
If we tell the seller that we approved the payment and that the goods should be delivered, it is because the purchase is covered. And you can make these coverages when your real concern is not fraud.
- Do you think that traditional financial institutions, banks, at some point saw Mercado Pago as an enemy, as something strange that came to interfere in their business?
We have always had a love-hate relationship with traditional entities and I would say that there is everything. There are banks that have always seen this as a threat and there are others that saw it as an opportunity.
Everything we process, absolutely everything, ends up in a bank account. And many of the products we have been making, we have not made alone. At one point, the tension was greater.
I think that today we are all at a stage of identifying ourselves as existing players in the industry, that we compete but also collaborate and that through many new regulations we also interoperate.
So we are part of a financial ecosystem that unites us and what we celebrate is that a few years ago it didn't even exist. Now it exists and it raises the bar for all of us. Because competition raises the bar and at the end of the day the one who wins is the final consumer.
- And does Mercado Pago currently identify any enemy, a new player that could complicate its business?
I don't know if we're talking about enemies. In the financial world there is much more diversity and space for several players to coexist. I think that the enemy can be oneself if one doesn't update oneself, if one doesn't adapt at the time when one has to do so.
That's what always keeps us paranoid. When we launched QR, they told us: no, but you're launching something that will cannibalize MPOS. Well, if we don't do it, someone else will. It's about not having that fear or that paralysis. I think the worst enemy we can see is ourselves staying still.
Without realizing that if you are comfortable it is probably because you are not adding value. We challenge ourselves not to stay in that place and perhaps become the new incumbents. That is the biggest fear, it is like not resting on our laurels. And always being very attentive to everything new that is coming.
- Can artificial intelligence change the payment system?
There have been three great moments. I don't know if the end user perceived the first two very much. Fraud prevention models that in milliseconds identify whether a payment is good or bad.
When you generate alternative risk models that can read and interpret 4,000 transactional variables to provide a line of credit, all of these are artificial intelligence models that the user does not see as much, but who then perceives the benefits of this use of technology.
The second one we see much more applied to more scalable operations, with less delayed processes because the machine or intelligence begins to beat human speed to carry out some processes.
Or we even see it in our developers, to generate code with fewer errors, in less time, where the user is not so aware that this is happening. But it happens.
And the third great innovation is when this artificial intelligence interface can start communicating with the end user. When it can start recommending when they should take out a loan, when they should pay it back.
If you spent more or less money on a particular service one month, if you have money left over, what is the best way to spend it. Offer you the best day of the month to pay off a particular debt.
This is where the next big round of innovation in financial services will take place - which seems like such simple things but is part of financial education. And to the extent that one can have all these conversations and solutions with their virtual assistant, there will be less need to go to a traditional branch.
So, the traditional branch is competing with your personal banker , who allows you to solve and talk to him while lying on the couch at home.
- Can you imagine a time when all transactions are carried out without physical presence?
We are living proof that you can grow without branches. And I think that the trend we are beginning to see in the world is more branches closing than opening.
- How is financial education in Argentina and Uruguay? Here it is mentioned, for example, that young people are a segment that has little, that they do not give it importance.
We are betting heavily on sectors of minors, because the earlier financial education begins, the more prepared the children will be to later experience more naturally the management of their finances more from the digital than from the physical.
Young people are much more attached to those brands that they value, that give them confidence, that generate empathy.
And we've seen with a lot of these guys how they quickly fall in love with the product, they recommend it to their friends, they quickly use it without too much friction and without too much complexity.
They are sponges, and everything technological is much more natural to them than it was for us or our parents to approach technology.
We have to take advantage of that, the capillarity that this new generation has in terms of proximity to technology, but offering them the right pillar, help and financial education.
Young people are very willing to incorporate these technologies, so I would say that they are one of the audiences that we are most excited about.
