Facebook's payment product is a whole new currency because its long-term competition isn't PayPal or Visa or even WeChat, but the renminbi, the euro, the yen, and the dollar, writes max_read
Photo-Illustration: Jed Egan, Photos: Getty Images At least it’s not “GlobalCoin.” For months now, rumors, leaks, and speculation have held that Facebook’s newly developed cryptocurrency — the entrance of the most powerful private surveillance apparatus on the planet into a sector created by and for obsessively secretive cypherpunk libertarian cranks — would be called “GlobalCoin.” It felt a bit on the nose.
Facebook is insistent that Calibra will not share “account information or financial data” to it, or to third parties — but that the wallet will use Facebook data to “comply with the law, secure customers’ accounts, mitigate risk and prevent criminal activity.” What this means in practice is not precisely clear, except that Facebook wants to make sure you’re aware that your Libra account balance will not be used to help target you with ads on its main platform.
But domination of the $689 billion global remittance economy is not actually Facebook’s end goal. In fact, it almost certainly won’t make much money directly from cross-border payments, since unlike its competition , Facebook reportedly won’t charge transaction fees for peer-to-peer payments.
But Facebook insists that its merchant fees would only be high enough to cover the cost of fraud risk. The real value of becoming the world’s ubiquitous payment app goes beyond the revenue from merchant fees. Facebook’s biggest problem right now — the problem that lurks behind stagnant user growth in Europe and North America — is that it’s just not essential.
Still, it’s worth asking, at this point: Why a cryptocurrency at all? If the limit of Zuckerberg’s ambition is to be the Western WeChat, or the new Visa and American Express, why does Facebook feel like it needs a whole new means of exchange? It could partner with a global banking conglomerate to undercut rivals’ fees, and leverage its already enormous network to enter the payment sector, the way WeChat or, to a lesser extent, Apple has — all without having to build out an enormous,...
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