Can Facebook’s Payment Network Topple the Visa and Mastercard?

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Facebook’s desire to enter the world of cryptocurrency is no secret. A number of leaks in the press, the hiring of some of the world’s top blockchain talent, and the announcement of a pilot remittance scheme have all added to the expectation that the social media colossus has something huge brewing in Silicon Valley. This speculation has been turned up a notch or seven by the Wall Street Journal who last week reported that Facebook is going to go full disruptor and launch a payments system that could eventually rival preeminent giants Visa and Mastercard. Such a move could prove to be the biggest disruption to the traditional financial system since the introduction of the credit card in the 1950s.

Project Libra

Project Libra, as the Journal says the plan is codenamed, would leverage blockchain’s increased speed and reduced costs compared to the established methods to all but eliminate fees for merchants, many of who accuse the likes of Visa and Mastercard of charging too high a fee for use of their services. Project Libra will initially be embedded within the Facebook ecosystem, and potentially with other sites that currently allow you to log in with Facebook credentials, although a larger scale rollout to all online merchants would be an inevitability once the platform was well established. The platform itself would utilize the forthcoming Facebook cryptocurrency, (given Facebook’s treatment of users’ data we suggest ‘FckuCoin’ as the name), and there is every reason to think that Facebook will find a way, probably through an app, to allow in-store payments through FckuCoin in any location that accepts the likes of Visa and Mastercard. A combination of minimal disruption and huge savings would be an extremely tempting proposition for retailers and could lead to huge disruption of a decades-old system.

Facebook Has the Chops

The principle of cryptocurrency as a threat to the existing Visa/Mastercard duoopoly has only so far existed in theory, with very little headway being made by crypto debit card projects. The only ones to have made any progress are the likes of Revolut and Wirex, who currently require conversion of crypto to fiat before spending. Coinbase recently announced a debit card that does conversion at point of sale, but this still leaves the merchant on the hook for the card processing fees they so detest. Facebook’s proposal carries a real threat to the likes of Visa and Mastercard, which is presumably why Visa has been in dialogue with Facebook over their plans, according to the Journal. While a flippening of the incumbent payment processors by a private, centralized token such as FckuCoin will benefit Facebook shareholders rather than holders of tokens whose projects had hoped to be challengers, it would still signal the kind of shift in how we use money that many in the community have been dreaming of ever since the Bitcoin whitepaper.