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Facebook Seeks $1B To Launch Crypto Payments Rails

Facebook

Facebook has been meeting with financial firms and online merchants as it makes plans to launch its own cryptocurrency-based payments system.

The social media giant has been working on the project — code-named Project Libra — for more than one year, with it centered around the company’s own digital coin that users could send to each other, as well as use to make online purchases.

Last month, it was reported that Facebook was looking to raise  as much as $1 billion in investments for the initiative. Now citing sources familiar with the matter, The Wall Street Journal reported that the company has met with dozens of potential investors, including Visa and Mastercard, as well as payment processor First Data, to raise funding that would underpin the value of the coin. This method would enable Facebook’s coin to hopefully avoid the price swings that other cryptos, including bitcoin, have faced in recent months.

Facebook is also talking to eCommerce companies and apps about accepting the coin, as well as gaining additional smaller financial investments from them.

The company is reportedly developing a checkout option that would allow consumers to use their Facebook log-in credentials as a payment method when shopping on the site or with other online merchants. Facebook is also considering “rewarding” users with fractions of a coin in return for viewing ads, interacting with content or shopping on the platform.

In the meantime, Facebook is attempting to lure stakeholders to join the project. Visa and Mastercard, for example, handle the majority of credit and debit card payments in the U.S. so if they do jump on board, it could threaten the card networks’ global payments standing.

As for merchants, Facebook is offering cheaper fees than the typical card processing costs that merchants pay on transactions. It is also working on a system where users could click ads to buy a product and pay with Facebook tokens, and then the retailer would be able to recycle those tokens to pay for more ads.

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Social distancing has changed eCommerce from a ‘want to have’ to a ‘must have’ for businesses, yet retailers could struggle to create convenient payment and refund experiences for their apps and websites, says Abdul Raof Latiff, head of DBS Bank’s digital institutional banking group. In the April 2020 B2B API Tracker, Latiff explains how banks can provide a timely assist via application programming interfaces (APIs) that integrate payments into those eCommerce platforms.

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