Since its announcement last June, Facebook’s Libra cryptocurrency project has faced significant international scrutiny. As a result, several of the social network’s partners have dropped out of the initiative. However, last week, e-commerce platform Shopify signed on to join the controversial e-currency program’s governing body, the Libra Association.
Why Shopify Joined the Libra Association
When Facebook announced its Libra initiative last summer, it had payment processors such as Visa, Mastercard, and PayPal on board. However, those three firms dropped out of the project in October, with Visa citing concerns regarding its viability. Similarly, high profile merchants and platforms like eBay, Mercado Pago, and Stripe dropped out. Indeed, regulators in the United States, Europe, and China have slammed the social network’s entrance into the financial sector.
As such, Facebook needed another firm to join its Libra Association to process transactions using its digital coin.
Shopify chose to fill that open position and has agreed to contribute $10 million to the organization. In its Libra partnership announcement, the firm said it wants to help “build a payment network that makes money easier to access and supports merchants and consumers everywhere.” Presently, the Canadian e-commerce company operates in around 175 countries.
In addition to expedited transaction processing, Shopify likely wants to make Libra a reality to cut down on its overhead. Facebook intends for its cryptocurrency to move between users with either very low or no fees. Accordingly, the corporation and the more than 1 million merchants it supports could save significantly on transaction processing costs if the digital coin launches.
Besides, as a member of the Libra Association, Shopify can earn interest on the money it’s contributed to the organization’s reserve.
Why Facebook’s Libra Might Launch in 2020
To establish the bona fides of its cryptocurrency, Facebook officials have said Libra won’t launch without the backing of 100 companies and approval by U.S. regulators. However, the firm’s second goal has proven elusive. Indeed, in October, members of the House Financial Services Committee slammed the initiative’s trustworthiness when questioning CEO Mark Zuckerberg.
Nevertheless, the service is still keen on introducing its potentially revolutionary financial product. Earlier this month, The Daily Block reported the Libra Association is considering tying its offering to the U.S. dollar. Previously, the group said it wanted to back up its digital coin with a basket of currencies.
Consequently, Facebook may finally be able to assure American regulators that its cryptocurrency is on the level. The social network is also taken steps to prove its viability as a payment brand. Last November, the corporation introduced a product called Facebook Pay that allows users to make purchases and donate funds. Moreover, the feature is interoperable between the corporation’s flagship network, Instagram, Messenger, and WhatsApp.
Facebook has also taken steps to optimize its financial offerings. In September, the Big Tech giant acquired an Israeli startup called Servicefriend. The company specializes in developing corporate customer service solutions that utilize human and artificial intelligence (AI) resources.
Before being acquired, Servicefriend gained a reputation for the robust natural language features of its AI agents. Therefore, the Silicon Valley corporation wants to use the startup’s technology to provide support for Libra users.
Provided Facebook can woo more firms like Shopify and placate U.S. regulators, it might be able to launch Libra this year as intended.