With Libra in doubt, Facebook launches ‘Facebook Pay’
Facebook says its new service will provide people with a convenient, secure and consistent payment experience across Facebook, Messenger, Instagram, and WhatsApp.
What is Facebook Pay?
Deborah Liu, VP of Facebook’s Marketplace & Commerce, authored a press release stating that the payment solution is designed to standardize the payment experience across the social media giant's basket of products. Liu says Facebook Pay will help people “finalize transactions in a consistent, secure and convenient manner across Facebook, Messenger, Instagram, and WhatsApp.”
During its last reported quarter, Facebook reported that 2.8 billion people used at least one of the company's products on a monthly basis. As it stands, it is possible to engage in many different types of transactions across Facebook’s products. Users can shop through both Facebook and Instagram, donate to causes, or simply send money to each other. Facebook Pay aims to streamline that user experience.
To use Facebook Pay, users only need to input their preferred payment method once. Once the platform knows the user’s preferred payment method, the user will not need to input this information each time they initiate a transaction.
Additionally, users can choose where the solution will be available. That means that Facebook will not automatically make the payment solution active on any single application until this is activated. This is to ensure that users have full control and knowledge of their financial activations with Facebook Pay.
Moreover, through the Facebook Pay platform, users have access to their transaction history, helping them quickly flag any irregularities or analyze their payments to set a budget. The platform also provides real-time customer support.
Initially, the Facebook Pay platform will be launched on Facebook and Messenger for United States users only. The solution can be used to participate in fundraisers, buy tickets to events, make peer-to-peer transactions on Facebook’s messaging app, and Facebook Marketplace. The communications giant has plans to roll the functionality out over all jurisdictions as well as on Instagram and WhatsApp in the future.
Libra versus Facebook Pay
The payment methods that users can add to the Facebook Pay platform include many of the most widely used credit and debit cards. PayPal is also supported. Liu stressed that payments executed through Facebook Pay leverage existing partnerships with fiat payment processors and do not have anything to do with cryptocurrency.
Liu explained, “Payments are processed in partnership with companies like PayPal, Stripe, and others around the world. Facebook Pay is built on existing financial infrastructure and partnerships, and is separate from the Calibra wallet which will run on the Libra network.”
While Facebook is taking great pains to ensure that it distances Facebook Pay from its embattled digital asset project Libra, it is difficult not to see a connection between the announcement and it’s stalled cryptocurrency project.
The Libra project caused immediate controversy when it was announced. Due to Facebook’s size and global reach, many believed the Libra project would function as “a gateway digital asset” bringing the merits and advantages of the cryptocurrency sector to a greater market across the world.
However, regulators and authorities in many jurisdictions across the globe expressed concern for the same reasons. Policymakers believe that a Facebook-backed digital currency has the potential to destabilize the global financial market or threaten existing reserve currencies.
These worries led to increased pressure from authorities on Libra, Facebook, as well as its partners who would be processing the payments. As a result, a number of parties who had signed on as partners began to pull out, beginning with PayPal. Other high profile members who pulled out include Visa, Mastercard, Stripe, and eBay.
The Libra team still plans to launch in 2020. However, the future remains uncertain.
A look into the future
Pundits are drawing a connection between the exit of fiat payment processors from the Libra project and the launch of Facebook Pay. Facebook appears determined to create a global system of standardized payments, with it at the center, one way or another.
Liu confirms this in the press release saying, “Facebook Pay is part of our ongoing work to make commerce more convenient, accessible and secure for people on our apps. And in doing so, we believe we can help businesses grow and empower people everywhere to buy and sell things online. We’ll continue to develop Facebook Pay and look for ways to make it even more valuable for people on our apps.”
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Alex Lielacher, Khareem Sudlow