PayPal will make its investment through the purchase of common stock in Nasdaq-listed MercadoLibre. Meanwhile, MercadoLibre will publicly offer about $1 billion of common stock and is also getting $100 million from an affiliate of Dragoneer Investment Group.

The PayPal and Dragoneer investments are contingent upon the closing of the public offering.

Founded in 1999, MercadoLibre is Latin America's leading ecommerce firm, building up six integrated platforms that are used by millions of people and companies to buy, sell, announce, send and pay for goods and services over the internet.

The firm says that it will use the funding to expand its platform, strengthen its logistics infrastructure and invest in inclusive end-to-end financial technology and payments tools.

Marcos Galperin, CEO of MercadoLibre. "We are excited to welcome these investments which will allow us to significantly accelerate our growth. We look forward to accelerating our leadership in ecommerce and payments and foster financial inclusion in Latin America as a result of our alliance with a global leader in the industry such as PayPal."

PayPal has been ramping up its spending recently, with CEO Dan Schulman last year committing to pump $3 billion a year into acquisitions as the company bids to move beyond its roots, extending its reach to all corners of the payments market, becoming a "one-stop solution for global commerce".

Says Schulman of the MercadoLibre investment: "We’ve been impressed with the digital commerce and payments ecosystem Marcos and his team have built. We see great opportunities to integrate our respective capabilities to create unique and valuable payment experiences for our combined 500 million customers throughout the region and around the world."