March 1, 2024

Facebook’s mission is to “bring the world closer together”. Increasingly, it’s not just about connecting friends and family to exchange messages, but also serving as a platform for people’s financial lives.

Facebook enabled payments of around $ 100 billion last year, according to David Marcus, who heads the company’s financial services division. But that’s just the beginning of the social network’s ambitions in the financial sector, writes Marcus in a new memo about the country’s “broken” payment system reported in the DealBook newsletter.

At the center of Facebook’s push into payments is Novi, a digital wallet that allows users to move money around the world quickly and cheaply (in many cases for free). The company had plans to pair it with a “stablecoin” cryptocurrency called Libra, but that was put on hold upon regulatory scrutiny, and now the scaled-down project known as Diem is overseen by an outside nonprofit group that runs the necessary government Obtaining permits.

Describing some of Facebook’s setbacks while trying to break into crypto Payments industry, Marcus calls the technology giant, which is the subject of antitrust investigations around the world, an underdog.

Facebook encounters unfair resistance in the financial industry, he wrote. “I’ve heard several conversations about how great this proposal would be if only Facebook wasn’t involved,” he said. “I understand and accept the need for an additional check due to our size.”

But Mr. Marcus describes Facebook as a “challenger in the payments industry” with no concrete plan in place to monetize the use of the Novi wallet, which does not charge any fees for person-to-person payments even across borders.

He added that there would be great value in allowing users to pay in dollars, euros and other fiat currencies through the Novi wallet.

“So why not just do that and call it a day?” He wrote. “Well we could.” Before he makes up his mind, however, he doesn’t want to “waste our shot” integrating stablecoins into an “open, interoperable protocol” for online payments. “To achieve the maximum effect, it would not be enough to build a closed system with only Fiat,” he said in the memo.

Crypto advocates say blockchain technology enables products that eliminate middlemen, credit checks and fees, and enables people excluded from traditional financial services to transact anytime, anywhere. Marcus believes that a well-designed stablecoin pegged to a fiat currency and backed one-to-one in cash reserves could offer strong consumer protection. It would also be faster to access funds than traditional bank accounts.

In practice, regulators are cautious about stablecoins. An investigation by the New York Attorney General’s office of the popular stablecoin Tether found that the company minted tokens with no reserve funds to aid them. In the past few weeks, crypto tokens have raised concerns with Treasury Secretary Janet Yellen; the chairman of the Securities and Exchange Commission, Gary Gensler; and Senator Elizabeth Warren, Democrat of Massachusetts.

Mr. Marcus tries to allay these concerns. “We will continue to hold out and show that we can be a trustworthy player in this industry,” he wrote, adding that the Novi wallet has licenses or permits in almost every state and the Diem stablecoin project “all legitimate concerns have been addressed ”.

Facebook’s digital wallet is ready to hit the market, said Marcus, and “we deserve a fair chance.” Judging by Facebook’s difficulty getting to this point, regulators have yet to be convinced.