October 15, 2019

Visa, Mastercard abandon Facebook’s Libra digital currency plan

[ by Legal Era News Network ]

Visa and Mastercard announced that they have shunned Facebook’s Libra project which will set a fatal blow to Facebook’s plan for a worldwide digital currency. PayPal was the first of Libra’s big partners to quit. Several other large companies are also said to be exiting Libra. Payment processing company Stripe is stepping back, as well as online auction company eBay.

Facebook has faced substantial criticism over its plans to create a separate, private currency system to allow cross-border payments.

Financial regulators as well as members of Congress on both sides of the political divide raised concerns over the privacy issues as well as money laundering that are likely to erupt given that Facebook controlled a currency.

Visa and Matercard hold an effective duopoly over credit and debit cards in the United States and Europe, and are making substantial inroads into payment systems of developing countries. Their initial agreement to join the Libra Association instantly gave legitimacy to Facebook’s project. It also gave Facebook access to Visa and Mastercard's networks, which could have given a pathway for users to convert traditional currency into Libra.

According to US President Donald Trump, Facebook should be subject to US banking laws if the Libra project were to move forward.

According to Visa, it would re-examine a potential membership in the Libra Association if and when Facebook is able "to fully satisfy all requisite regulatory expectations" in its development of Libra - a sign that the regulatory and political hurdles Libra is facing were becoming unbearable.

Libra’s membership now consists mostly of venture capital firms and non-profits. Uber, Spotify and Lyft continue to be members. Vodafone, the Europe-based telecommunications company that has a substantial presence in Africa and has specialization in mobile payments, was also still listed as a member.

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