Facebook announces the launch of ‘Facebook Pay’ in a bid to finally enter the payments space.
Facebook’s crypto project, Libra, seems to have fallen on its knees due to the regulatory resistance. Hence, as its vision of global payments and cryptocurrency are put on hold, the social media giant has initiated USD payments in the US.
Facebook Pay works just like Venmo but will be available across all Facebook apps, including Instagram and WhatsApp. It will roll out its first version this week, beginning with Facebook and Messenger.
It will provide for fundraisers, in-game purchases, event tickets, person-to-person payments, as well as purchases from select Pages and businesses on Facebook Marketplace.
Facebook has been coveting the payments’ space for long. This move enables it to begin monetizing the social media space internally. Moreover, it will also aid in the unification of all Facebook services like WhatsApp, Instagram, and Messenger linked through a payment channel.
The blog post notes,
“Facebook Pay will make these transactions easier while continuing to ensure your payment information is secure and protected.”
What Happens to Libra?
Facebook’s much-hyped project seems to be failing as Governments across the world stand against it. First, they were against the idea of a ‘basket of currency’ as the proportion of assets in the basket would be arbitrary. Then Facebook proposed to move with an individual currency backed stablecoins.
However, it gave rise to the second issue of capital control. Consequently, in the US, the Financial and Housing Committee expressed that the stablecoins come under the purview of the SEC. The international trade organization, IOSCO, seems to agree with it as well that stablecoins must be regulated as securities.
Apart from competing with Paypal’s Venmo, Facebook Pay is the US equivalent of Alipay and WeChat payment system in China.
However, the Chinese seem to be ahead on that as they will soon launch its’ Digital Currency on the blockchain. Hence, under competitive pressures, Facebook must move into payments.
Meltem Demirors, the CSO at Coinshares observed from their recent research that,
Social networks are the new payment networks, and they’re going to be monster distribution channels…
Facebook Pay is independent of Libra and could provide efficient monetization for its users. Hence, eliminating the need for a blockchain-based system. However, it will be restricted by geographic boundaries. Thus, there is still seems to be some value for the company in pursuing its crypto project. However, in the current US regulatory environment, it looks like a far fetched dream.
Do you think the alternative taken by Facebook will affect the crypto markets? Please share your views with us.