Mercado Livre launches cryptocurrency in Brazil that will serve as cashback

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MercadoLibre announced this Thursday (18) the creation of a cryptocurrency called MercadoCoin, which will be implemented as part of a customer loyalty program of the largest e-commerce company in Latin America.

MercadoLibre reported that customers will earn “MercadoCoins” as cashback when purchasing products on the platform.

Consumers will then be able to use the digital currency, which follows the ERC-20 token standard – for monitoring transactions –, from ethereum, for new purchases on MercadoLibre, with the option to pay only a slice in MercadoCoins.

For those who are a Mercado Pago customer, the company’s financial services unit, it will also be possible to negotiate it or acquire more units on the market.

“Whoever bought a product and received MercadoCoins, in their next purchase, at payment, can pay with all the modalities and one of them is using MercadoCoin”, said Fernando Yunes, leader of Mercado Livre in the country, to journalists.

The cryptocurrency is available from this Thursday to 500,000 users in Brazil and should reach the company’s entire customer base in the country, around 80 million, by the end of August, Yunes said. The measure should be expanded to other Latin American countries, but there is still no timetable.

The products whose purchases will generate MercadoCoins and the relationship between how many coins the customer will earn in each payment will be defined by the company’s business team, according to Yunes.

“The business team will decide how much MercadoCoin we want to put, for which categories (of products) and the percentage of the value of the product”, he said, adding that it is the same dynamic that occurs in commercial campaigns.

For sellers on Mercado Livre, nothing changes, as they will not receive payment in MercadoCoin, but in local currency through conversion.

LONG TERM

The initiative comes amid heightened competition in Brazilian online retail, given the impact of macroeconomic issues such as interest rates and inflation, and a slowdown after the sales boom driven by the pandemic. At the same time, it comes after a sharp drop in cryptocurrency prices globally this year, putting the industry in check.

“We’re looking at the long term, at opportunities, we’re not thinking about short-term swings,” Yunes said.

The currency has an initial value equivalent to US$ 0.10, the company said, and its price will vary according to market supply and demand, with no backing.

Although initially trading on MercadoCoin is only available on Mercado Pago, one of the ideas is to expand to external platforms in the future, according to company executives, who also did not provide details on when this might occur. Currently, Mercado Pago offers the purchase and sale of bitcoin, USDP and ethereum.

The investments in the creation of the currency, whose development took 18 months, and the estimate of how much it can raise the results of the Free Market were not disclosed by the executives.

In New York, where they are traded, Mercado Livre’s shares dropped 1.9% around 11:35 am (Brasilia time).

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