I have some history with this –
no, not directly but I’ve been researching the various attempts that Facebook
made in order to enable their user base to make person to person as well
commercial payments. I could be wrong but none of these efforts seemed to have
panned out for Facebook. Case in point, Facebook has had an e-money license for
their Irish and Spanish subsidiaries for nearly three years – this licenses are
in theory “passportable” throughout Europe which would have given Facebook the
opportunity to offer some form of payment service throughout the EU. I’ve known
of some implementations in France and the UK but never anything that would have
enabled them to go cross-border. In other words, Facebook has had to deal with
the same payment fragmentation landscape in Europe and elsewhere than the rest
of us. When Facebook officially threw in the towel by shutting down the P2P payment
service on its messenger platform, I knew this was ominous.
On
the other hand, and like so many, I’ve been pondering use cases for the
blockchain and cryptocurrencies for years and wondered if there ever will be a
use case that is worth solving for. As much as I like using DLT for public
directories, or keeping track of digital assets – I’ve never felt that a real
problem would be solved with any of these approaches and of course, with
cryptocurrency as a payment form, you really only solve the cross-border
problem but at an immense cost to usability and convenience and so far it’s not
necessarily better than the banking system – it’s more like black-market shadow
of the former that follows a decentralized approach.
In both cases, Facebook and
Cryptocurrencies, I gave up looking for answers.
Until this week with the
official announcement that Facebook is issuing a stablecoin and
it has some serious partners – PayPal, UBER, Spotify, Stripe, VISA and
MasterCard and more that have each invested resources. When the first news piece about
Facebook’s cryptocurrency surfaced, I didn’t make much of it – I felt it’s
another big player that is moving with the times. However, the announcement
from this week could be a leapfrogging event – or at the very least, a dramatic
change in the payments game. I would go so far as to say: this is as geeky for
payment heads as was the landing of the Falcon 9 rockets on
the maiden voyage of Falcon heavy for space geeks. I know it’s
far-fetched but it was more about the realization that this might be an event
that will keep us occupied for the foreseeable future.
Right,
and why exactly?
Payments
is a global mess. Every country is doing it differently. Every country is at a
different level of standardization, electrification and digitization – there
are no two countries alike. In a world with nearly 200 countries and more than
7 billion people, this creates tremendous amounts of inefficiencies – not just
globally, or regionally – it goes all the way from micro-payments to
wire-transfers even in a hyper-local environment. I
keep saying in my presentations how crazy it is that Facebook has gone from
virtually 0 users to 2.5 billion MAU in something like 15 years. There has
never been anything like that in the whole world since civilization started. In
other words, if you wanted to clean up something as fragmented as the payment
landscape, you would probably just want to throw a layer over it that
standardizes how we pay at a global level. And to do that with some success you
need critical mass and an ecosystem. Facebook has both!
One
thing I know, this could be the most user-friendly payment system- while at the
same time, it has the most users. To me, this could very well end up being
another WeChat Pay or Alipay – but for the rest of the World. Which brings up
all the various points in how influential this could become and how it has the
potential to change society – especially in countries and regions where
leapfrogging would most likely happen because of stability issues in the system
(inflation, emerging markets etc.)
Instead
of trying to see where we could be headed with such a global payment platform
(think Star Trek) I have a couple of questions that I hope Facebook and the
regulators can answer:
1. "We"
know Facebook is looking to create an open association that can manage the
ecosystem. How prepared is Facebook to deal with the regulatory- and legal
challenges that will come?
2. Will
the central banks perceive this as a threat or as a truly welcoming effort to
combat cash and other nontransparent money movement schemes? How much control
do they want to exert on such a platform? Will they become nodes on the DLT?
3. Will
the users have sufficient trust in this platform (in fact they must trust it
more or equally than their trust in their existing FIAT scheme)
Any
other points here would be highly appreciated – feel free to comment.
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