20 / 05 / 19

Facebook’s Cryptocurrency: How Could it Affect Payments?

If you follow the latest crypto-related news, you already know that Facebook has been quietly working to become the world’s largest cryptocurrency player by developing a mobile payments platform that could rival and disrupt the major credit card companies and P2P platforms.

 

Facebook’s march towards crypto has been slow, steady, and secretive, but we do know that they’ve recruited executives from PayPal and Coinbase, as well as financial firms and online merchants to help launch a cryptocurrency-based payments system. The platform, code-named Project Libra, will reportedly let users use digital coins to make purchases on Facebook and third-party sites.

 

While nobody really knows what the future will hold with Project Libra, here are some possibilities on the way that it can affect the payments industry:

 

It could challenge PayPal, Apple, Google, Amazon, and Square

Facebook currently has about 2.38 billion monthly active users. If even 10% of users decide to use their coin, it could theoretically become the most widely used currency in the world. If Facebook tethers more third-party websites, apps, and stores to that platform, platforms like PayPal, Apple Pay, Google Pay, Amazon Pay, and Square will be challenged.

 

It could fuse Facebook’s fragmented payment and e-commerce efforts

Facebook already offers P2P payments on Messenger, in-app checkouts for purchases on Instagram, live videos that allow merchants to sell their products, and Facebook Marketplace. Launching a single currency could tie all of these things together and form the foundations of a stable e-commerce ecosystem.

 

Facebook could pay users and offer merchants discounts

Facebook could reward users with crypto coins for doing things like viewing ads, or distribute them as loyalty points for engaging with content or buying products, similar to “Amazon Coins.”

 

Facebook could also reward merchants for accepting more Facebook coin payments. For example, if a user clicks through a Facebook ad and completes a purchase with the coins, the retailer can use those coins to buy additional ads at a discount.

 

Traditional credit card companies could be disrupted

With that said, Facebook is reportedly in talks with Visa and Mastercard, which might want to invest or partner up. This makes sense because Facebook would need a physical debit card partner to expand into brick-and-mortar stores, similar to how PayPal partnered with Visa, and Square partnered with Mastercard.

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