December 9, 2023

A woman uses the Mercado Pago app at her store in Buenos Aires, Argentina. October 15, 2020

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MEXICO CITY, July 6 (Reuters) – US-based money transfer company Western Union announced an agreement on Wednesday with South American e-commerce giant MercadoLibre (MELI.O) to send digital remittances to Mexico, which has become a lifeline. weak local economy.

The two companies said the partnership will allow families abroad to send money via Western Union, while families in Mexico can collect payments through Mercado Pago, MercadoLibre’s digital finance arm.

“The amount of time we save for people who don’t have to go to a physical location to collect remittances, we think that’s an important advantage, and… you don’t have to move that money from one place to another,” said Pedro Rivas, director of Mercado Pago in Mexico.

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Stores in Mexico, including major chains like McDonald’s, Domino’s Pizza, and Starbucks, are increasingly accepting Mercado Pago as a form of payment.

According to the companies, more than 70% of transfers are currently collected in cash in Mexico, where low bank penetration means that more than half of its 126 million residents do not have an account.

Remittances to Mexico hit a record $5.17 billion in May, largely due to the economic recovery in the United States, the number one destination for immigrants from the Latin American country.

President Andres Manuel Lopez Obrador, who often boasts of strong growth in remittances received by Mexico, said it could reach a record $60 billion this year, a 16% increase from 2021.

But experts have warned that the flow of funds may decline in the coming months due to the impact of the expected recession in the United States.

“In the first half of 2022, there are many negative indicators for US economic growth, which represent a negative risk for remittances,” said Gabriella Seiler, director of research at local company Banco Base.

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Noe Torres reports. Written by Kylie Madre. Edited by Aurora Ellis

Our criteria: Thomson Reuters Trust Principles.

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