Shopify announced on Feb. 21, 2020, that it’s a part of the Libra Association. Shopify joins Facebook, PayU, Farfetch, Lyft, Spotify, Uber, telecom provider Iliad, blockchain organizations Anchorage, BisonTrails, Coinbase and Xapo, and venture capital firms and nonprofits as members of the independent, not-for-profit association headquartered in Geneva, Switzerland.
In company news, Shopify states: “As a member of the Libra Association, we will work collectively to build a payment network that makes money easier to access and supports merchants and consumers everywhere.”
In June 2019, Facebook announced its plans for Libra, a global, blockchain digital currency that would be backed by a reserve of cash and assets. With Libra, people who use apps, including Facebook’s Messenger and WhatsApp, could make payments and receive money. Facebook also announced its plans to launch a new subsidiary, Calibra, in 2020. The Calibra mobile wallet would enable people to take advantage of financial services and participate in the Libra network.
The Libra Association white paper, An Introduction to Libra, explains that internet and mobile broadband service has enabled people all over the world to connect, but approximately 1.7 billion adults don’t have bank accounts. Moreover, financial services, such as wire drafts and payday loans, cost money. Unbanked people say these fees, along with lack of convenient access to a physical bank and lack of necessary documentation keep them outside the system.
Challenges to Overcome
In October 2019, Facebook CEO Mark Zuckerberg testified to the House Financial Services Committee. He stressed that U.S. residents represent millions of people outside of the banking system, and some people need the ability to send money to family in other countries. Libra would solve issues such as these — which the current payment infrastructure can’t address. He explained that Facebook wants to empower people with simple, secure ways to transfer money and to help create business opportunities.
He conceded that risks include financial stability and possibly creating a way to fund malicious activity, but another risk is not innovating. “While we debate these issues, the rest of the world isn’t waiting,” he said. China’s leading online payment platform Alipay, for example, has more than 1.2 billion mobile payment users.
He also told the House committee that this project is too important for only one company to undertake, so a group of founding members formed the Libra Association. Zuckerberg stated that Facebook wouldn’t proceed with the project without approval from U.S. regulatory agencies; however, Facebook doesn’t control the Libra Association, and he couldn’t speak for the entire organization.
What Libra Could Mean for ISVs
The Libra ecosystem consists of the Facebook engineer-developed blockchain, and Move, a new programming language designed to make it easier and more secure for developers to create applications that run on it. Facebook is contributing the code to the Libra Association under an open-source license.
There is still much to work out before Libra could launch and make payments as easy as messaging or texting, but it’s certainly something for ISVs and software developers to watch. Your clients may eye new markets of currently unbanked people or want to adopt the new payment method to give its customers greater convenience.
It seems unlikely that it would replace standard payment methods, and major players are still evaluating the relationship they’d have with Libra. MasterCard, Visa, eBay, Stripe, Mercado Pago and PayPal initially joined the association and then withdrew, choosing to weigh options and watch the progress the initiative makes. However, Libra could become another option in an industry continually looking for ways to make payments easier and more consumer-friendly.