The payment industry has been booming, thanks to the internet. It all started more than a decade ago with PayPal, as you could easily send over money from one account holder to another without depending on your bank account.
While banking protocols were slow, internet transfer was completed within a millisecond. This prompted the growth of more advanced protocols and legacy institutions like banks had to play catch up.
India has experienced a similar spurt of growth in the last few years. Due to demonetization, digital payments got a massive boost in the country and multiple new fronts for payments were established. Firstly, India has the UPI for a quick bank-to-bank transfer, wallets are operated, and special “payments bank” have been set up. While the world was moving forward, one tech giant missed out on the trend, and that’s Facebook.
The company dominates the social media segment thanks to Facebook, Instagram, Messenger, and WhatsApp. Users are addicted to their services, but there’s one thing still pending. People aren’t trading or transferring money on them. And, this is a source of lost revenue.
Hence, today Facebook announced a digital coin called Libra. It’s a cryptocurrency project that will let you buy things or send money to people with nearly zero fees. Basically, you can buy or cash out your Libra (coins?) online or at physical stores, and spend it using interoperable third-party wallet apps or Facebook’s own Calibra wallet. This wallet will be integrated into WhatsApp and Messenger as well.
With Libra, Facebook has a chance to further monetize its user base by ensuring transactions take place on their own platform and reducing dependence on ads. Over the years, the world’s largest social network has allowed users to send money and purchase products, with Libra it’ll contain the complete transaction.
Libra (currency) will be governed by a non-profit organisation called the Libra Association and Facebook isn’t the only governing party. The group currently consists of 28 partner companies including Visa, Mastercard, PayPal, Uber, Lyft, Coinbase and others
Calibra will develop financial services and products around the Libra network, which will eventually be fully governed by the independent Libra Association. Calibra intends to start with a digital wallet for the Libra coin, which will let users transfer funds to each other, as well as store their tokens locally.
While Calibra is only targeting basic fund transfers, to begin with, the subsidiary plans to expand its services to allow customers to pay bills and purchase goods or services, such as coffee or public transit access. The subsidiary also intends to follow guidelines issued by the Financial Action Task Force and other national regulators.