Facebook has said it is ready to launch its most ambitious new product in years, a digital wallet called Nov. But the one responsible for this mission says that Washington could stand in its way.
And the company needs to convince regulators skeptical of its strength that it’s a good idea. “If there’s one thing we need, it’s the benefit of the doubt,” said David Marcus of Facebook. We start with a lack of confidence and we need to make up for it.
Many of the company’s broader ambitions, such as building Metaverse and developing its own shopping platform, are linked to innovations in payments.
Marcus visited Washington last week to meet with key regulatory stakeholders about Novi, a blockchain-based wallet application.
He said cryptocurrency-based payment systems help lower the level of accessibility to a modern financial system.
He was also there to discuss the Diem Association, a group of 26 companies and not-for-profits that are building a blockchain-based payments system used by Novi.
The group aims to act as an unbiased third party allowing various digital wallets around the world to trade using the same type of cryptocurrency, called Diem.
Marcus says Facebook hopes to launch Novi in conjunction with Diem by the end of the year.
And while Novi is ready to launch now. But it’s unclear whether Diem may be ready this year, in part because it requires more regulatory support. We plan to put Novi on the market this half, no matter what, he said.
The company originally announced its digital payments ambitions in 2019. But it had to transform and rebrand its products when it was met with skepticism and early scrutiny by regulators.
“I hope Washington will be more receptive because a lot has changed,” Marcus said. I think one of the things I failed to explain earlier is how to make money.
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Facebook struggles with trust as it prepares to launch Novi
The company has been facilitating digital payments for years. But payments have not been a profitable business for the company yet.
In the past 12 months, it has processed about $100 billion in payments, mostly through messaging platforms, shopping experience and small advertisers. But it does not take disguised commission from those transactions.
The company wants to dig deeper and help build a digital payment system that it hopes will make it easier and faster for more people globally to transact online.
It begins launching free peer-to-peer payments next year, before eventually facilitating paid transactions between people and merchants.
Marcus does not expect any significant returns from payments before 2023 at the earliest, when merchant payments begin to develop.
One of regulators’ biggest concerns is Facebook’s entry into the payments world, as it could destabilize the global financial system by setting its digital currency, Diem, against global national currencies, such as the dollar.
To address this concern, Diem moved its operations in May from Switzerland to the United States. It said it is launching a digital currency Diem with a market capitalization pegged to the US dollar.
For Marcus, a former PayPal CEO who has spent most of his career working with small businesses, the goal is to help regulators understand what Facebook does and why it matters.
He says: The current system suffers from a problem, as there are 62 million people in the United States do not deal with banks. There are 1.7 billion unbanked people in the world. Another billion or so suffer from a lack of financial services. And it shouldn’t be this way.
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