Facebook has reportedly been in talks with various payment processors, e-commerce merchants, and other financial firms to get them to support a cryptocurrency-based payments system it’s currently developing.
According to the Wall Street Journal, the social media giant has reached out to companies like Visa and MasterCard about the project, which is reportedly known as ‘Project Libra’ in the company. It will reportedly include a blockchain-based cryptocurrency pegged to the value of the US dollar, a stablecoin.
Some of the use cases being considered for Facebook’s stablecoin include allowing its WhatsApp messaging service users to send money to one another, and rewarding users with a fraction of a coin for looking at ads.
The social media giant is also looking to recruit e-commerce firms and apps to accept its cryptocurrency and integrate it as a payment system, in a way similar to how websites and apps currently use Facebook to let users log-in.
The firm has been acquiring blockchain startups for months now, and it’s well-known it has a team working with blockchain technology. While Facebook hasn’t officially confirmed it is launching a cryptocurrency, previous reports suggested it already contacted crypto exchanges about listing it.
To support its stablecoin-based payments network, Facebook is said to be looking for up to $1 billion in investments as collateral. Analysts have estimated Facebook could bring in as much as $19 billion until 2021 thanks to the launch of a cryptocurrency.
Recently, the social media giant announced a major shift to focus on privacy, with CEO Mark Zuckerberg revealed payments and private commerce are going to be an important part of Facebook’s future.
We just announced a fresh, new design for Facebook that makes communities as central as friends. FB5 is simpler, faster, more immersive and makes it easier to find what you're looking for and get to your most-used features. #f82019 pic.twitter.com/YWIGEnpO4M— Facebook (@facebook) April 30, 2019
Some believe that if e-commerce takes off on Facebook’s various platforms, it could see brands spend more on advertisements with it, and consequently increase revenue. New revenue streams may also be created if users adopt its payments features.
Henry Liu, a former Facebook employee and a managing partner at a blockchain investment firm, was quoted as saying:
Payments and commerce are Facebook’s only way out from its freemium, advertisement business model.
Notably Gavin Baker, a former Fidelity Investments portfolio manager, has in the past stated he believes Facebook’s stablecoin will likely be a “serious threat” to companies like Visa and MasterCard. This, as the social media giant doesn’t need to monetize transactions by charging a processing fee.