Payment preference in most parts of Latin America is overwhelmingly in favor of Mercado Pago, the leading platform for online transactions. For a forex broker seeking to trade with the Argentina, Brazil, and Mexico trading community, integration of this platform is central to business success. Mercado Pago is widely used by most residents in these countries and has built some natural expectations that their forex trading accounts would provide the same level of funding convenience. Regrettably, most of the foreign brokers have not modified their payment systems to receive regional customers such as Mercado Pago and instead push their Latin American customers toward unfamiliar funding methods that are more expensive or involve complex processing.
The inability to integrate is the reason why so many brokers have difficulties adopting Mercado Pago support even though they can see that there is a high demand among the potential customers across South America who would want to use this payment method. The technical needs include collaboration with local payment providers and the adherence to the local financial laws that are challenging to navigate successfully by small global companies. The high cost of integration and minimum volume can mean brokers with few Latin American customers are not economical to integrate using Mercado Pago and it generates a chicken and egg situation where not integrating limits growth of clients and not growing client base limits integration.
The competitive advantages of brokers that successfully implement Mercado Pago to provide their services in the region are that the payment system is popular, so a broker can draw in clients, who would otherwise go to other competitors with more convenient funding options. Brazilian and Argentine merchants like the fact that they can use their available Mercado Pago balances to fund their accounts instead of having to deal with international wire transfers or credit card conversions, which usually incur a fee. This preference is more pronounced in cases of currency fluctuations when clients wish to limit the exposure to changes in the exchange rates in funding the process.
The advantages of currency conversion can be observed when brokers are accepting Mercado Pago because the system can handle local deposits more efficiently than conventional international transfer systems that require intermediate conversion steps. The traders are able to open the accounts using their peso or real balances without having to concern themselves with the conversions that could have taken place at poor rates during the international wire transfers. These conversion benefits are especially helpful in cases of volatile market environments whereby the value of the currency exchange rate changes dramatically in one trading day.
The issue of security will also endear Mercado Pago to Latin American merchants who will feel more comfortable with regional payment systems rather than giving their credit card details to foreign forex broker sites that they have never used before. Two-factor authentication and fraud protection that Mercado Pago provides offers safety measures that clients appreciate when sending money to trade. This security benefit is particularly valuable to the larger deposits or when the offshore brokers have a questionable regulatory status in the eyes of local customers.
Speed of processing benefits render Mercado Pago especially beneficial to active traders that require a swift supply of funds into their accounts to take advantage of time-sensitive trades that arise when the market is volatile. The standard bank transfer to Latin American bank accounts can be cleared in several days and sent abroad to brokers whereas Mercado Pago transfer is processed much faster and in regional business hours. Such speed difference is important when using day trading or news trading strategies, where the entry into a position must be done immediately upon economic announcements or the occurrence of a breaking news.
The need to be cost-efficient makes most Latin American traders turn to brokers that take Mercado Pago since the costs of transferring money in the region are usually cheaper than the cost of transferring money abroad, or other currency conversion charges when using other funds. It is common to find that Mercado Pago is economical in the long run to clients who finance trading accounts; particularly when brokers pass on the expenses of processing payments to their clients. Other brokers will even accept lower spread or even promotional rates to clients who transact in well-liked regional payment systems.
There is also a possibility of market expansion to forex broker companies that may invest in the Mercado Pago integration opportunities because the payment system can open up the previously unexplored Latin American trading communities that the competitors have failed to penetrate. Regional specialization enables certain brokers to build closer relationships with local clients by providing payment mechanisms that match regional preferences and practical needs.
The benefits of customer service are experienced when brokers accept popular forms of payment such as Mercado Pago because customers would receive fewer funding issues and challenges that need the help of the broker call centers when they are setting their accounts and trading on the platform.