Facebook made waves this month when it announced its Project Libra cryptocurrency initiative. The project is backed by more than two dozen companies, including payment giants like Visa and PayPal, rideshare firms such as Uber and Lyft, eCommerce firms like eBay and Mercado Libre and nonprofits including Kiva and Mercy Corps.
The announcement establishes a low-cost ecosystem that will enable Libra cryptocurrency users to make purchases both on Facebook and other online marketplaces. The system will use the Libra Blockchain, a new payment rail that provides a single data structure to record transactions, which are visible to others on the network.
Project Libra is still in its early stages, so its full potential is challenging to gauge. The network will be shaped by players across many industries who will influence what the framework and ecosystem will ultimately look like.
PYMNTS spoke with several founding members of Project Libra, including financial services provider Mastercard, luxury retailer Farfetch and nonprofit organization Women’s World Banking, about the network and what it means for the future of payments.
Building Infrastructure from Scratch
Jorn Lambert, executive vice president of digital solutions at Mastercard, believes those looking to create a payment infrastructure that supports Libra must clearly understand who controls and governs it. The Libra Association was created specifically to demonstrate that the network will operate separately from Facebook.
“We will work hard to draw a distinction between the two things,” he said. “We would not participate if we thought one firm was pulling more weight than the others, breaking trust in the system.”
Mastercard has invested heavily in blockchain-based initiatives, and Lambert stated the company is prepared to introduce cryptocurrency to a larger audience with Project Libra. One strategy in that effort is to get a jump on system governance with the assistance of regulators.
“We have to understand what [regulators] really want – consumer protection, avoiding fraud, avoiding terrorism financing, avoiding money launderers,” said Lambert. “Our task is to work with regulators to achieve a framework in which that can exist.”
Lambert believes Mastercard’s own blockchain-based experiments have put it in a unique position to create infrastructures for new payment methods.
Delivering a Smoother eCommerce Experience
Online luxury retailer and fellow Libra Association founding member Farfetch sees Libra’s blockchain-based technology as an opportunity to overhaul global eCommerce and retail experiences.
“As an early member, [Farfetch] will actively participate in the technical development of the blockchain,” said Stephanie Phair, the company’s chief strategy officer. “At the same time, [we will be] able to learn from our participation and accelerate our other blockchain projects.”
Those other projects include enhancing IP protections, providing more transparent insights into product life cycles and improving the global eCommerce experience. Libra could help Farfetch deliver more seamless shopping experiences that provide international customers with personalized recommendations similar to those offered by over-the-top (OTT) streaming services.
“Luxury fashion [consumers] are very sophisticated, and they have become used to personalized experiences in many aspects of the products and services they use,” Phair said. “Netflix and Spotify [tailor] recommendations [just] for you. Consumers expect a similar level of personalization and service from the retail industry. They also expect to have seamless experiences whether they shop in-store or online.”
Libra’s blockchain solution could help to deliver on those expectations, she explained, and could provide greater transparency into retail products.
Building Infrastructure to Boost Financial Inclusion
Retailers and payment solution providers see Libra as a means to improve the flow of payments, but nonprofit organization Women’s World Banking has a much different set of priorities.
Its mission is to promote financial inclusion among women. The World Bank’s Global Findex database states that 1.7 billion people around the world are unbanked, and women in developing nations are 9 percent less likely to hold bank accounts than men.
Tom Jones, chief operating officer at Women’s World Banking, noted that different markets have distinct societal and cultural barriers to women’s financial inclusion, but infrastructure itself can sometimes prevent them from participating in financial services.
“A lot of it comes down to the infrastructure that is available [and] the user experience being designed for men, rather than women,” Jones said. “What we found through our work over the years … is that if you design a product or a service for a man, only men tend to use it. But if it’s designed for a woman, both men and women benefit from it and use it.”
Women’s World Banking learned this when collaborating with a bank and a mobile network operator on a Nigerian market mobile account. The product was designed to help users pay for utilities, a task for which women were often not responsible in this region, prompting low usage. The nonprofit now includes features in its products that are relevant to local women, such as when it urged a Jordanian insurance provider to add maternal health coverage to one of its services.
A lack of basic identification tools can also prevent financial inclusion. Many women in developing nations do not have access to government-issued IDs, which makes it difficult, if not impossible, to meet FIs’ know your customer requirements.
Jones believes Women’s World Banking can use Libra to address these issues by shaping the infrastructure to improve financial inclusion among women. The nonprofit’s seat at the table allows it to collaborate with private companies that can act as partners and promote the organization’s mission.
“Some of these partners – think of the knowledge they bring to the table and technology they already have,” Jones said. “The ability to [work with] an association with a common focus and leverage that knowledge and technology together has the right ingredients for tremendous success.”
He added that while regulators in many global markets are not part of the Libra Association, they are increasingly looking for ways to bring women into the financial sector.
“From an infrastructure standpoint, we have the best opportunity to reach the furthest population,” Jones noted.
Smarter payments require modern infrastructures that can speed up processing, keep funds secure and carry transactional data. Facebook is aiming to deliver that with a network that will improve transactions for payment services, retail, humanitarian efforts and more.