The CEO of Mastercard, Ajay Banga, has detailed in a recent interview why the payments giant left the Facebook-led Libra Association last year.
Speaking to the Financial Times, the CEO and president of Mastercard since 2009 revealed that the firm started to see its position in the Libra Association in a different light when other members of the project started linking the soon-to-be-launched Libra cryptocurrency to a proprietary digital wallet called Calibra.
While other developers will be able to create their own Libra wallets, Mastercard didn’t like the idea. Banga said:
It went from this altruistic idea into their own wallet. I’m like: ‘this doesn’t sound right.
To the 60-year-old CEO financial inclusion would mean a government is able to pay its citizens with the currency, so they can then use it directly for day-to-day transactions while fully understanding how to do so. Banga noted that he doesn’t understand how it would work if someone gets paid in Libra to their Calibra wallet, to then move it again to buy goods.
Mastercard also reconsidered its position in the Libra Association over the lack of a clear business model. Per its CEO, there was no obvious way for the Libra Association to make money from its users. Banga commented:
When you don’t understand how money gets made, it gets made in ways you don’t like.
He added that another red flag for Mastercard were other association members not firmly committing to know-your-customer (KYC), anti-money laundering (AML), and data management controls.
As CryptoGlobe reported, Mastercard left the Libra Association in October 2019 at about the same time its rival Visa and eBay left it as well. At the time, a Visa spokesperson said the project wasn’t able to “satisfy all requisite regulatory expectations.” PayPal was another Libra Association that left the project, at the time claiming it was looking to focus on its roadmap and financial inclusion.
Out of the 28 founding members, eight have left Libra so far. Vodafone was the last one to leave, saying it will be focusing its efforts on the international expansion of its payment service M-Pesa, which is already “Africa’s most successful mobile money service.”
It’s worth noting Mastercard has a history of skepticism towards cryptocurrencies, with Banga in a 2018 lecture saying they’re “junk,” and arguing they shouldn’t be considered a medium of exchange.
Featured image via Pixabay.