By Christiana Sciaudone
Investing.com -- MercadoLibre (NASDAQ:MELI), one of South America's biggest companies and Amazon (NASDAQ:AMZN) rival, is up 8% after getting permission to operate as a financial institution in Brazil.
The Brazilian central bank gave its approval on Monday, allowing MercadoLibre to expand further into the credit market. The Buenos Aires-based company has operated Mercado Credito, a loan platform, for account holders of Mercado Pago, its fintech payment segment.
Shares of MercadoLibre hit a record last week, weeks after getting a 400 million-real ($74.2 million) loan meant to bolster Mercado Pago’s working-capital portfolio aimed at small businesses and entrepreneurs in Brazil, Bloomberg reported.
About 70% of Brazilians have bank accounts, according to 2017 data from Statista, and the banking industry is ripe for disruption, with high fees and interest rates, and painfully bureaucratic processes.
MercadoLibre is one of Amazon's biggest competitors in Latin America, and particularly in Brazil, where the Argentine company had a head start. Amazon started pushing into Brazil in earnest in 2017 after selling books for a few years.
On Monday, Amazon said it will open three new distribution centers in Brazil as e-commerce sales have taken off during the Covid-19 pandemic. Revenue in Brazil jumped 47% in the first six months of 2020, the most in 20 years, according to Ebit and Nielsen.