Facebook’s new project has been all in the news and media, is it a flash in the pan or are we witnessing the beginnings of disruption? In this piece by MoneyTransfers.com, online money transfers specialists, we explore how Facebook could change the money transfer industry.
Facebook isn’t new to this market
Facebook jumped into the money transfer industry in 2015 with its money transfer service for their Messenger app. One year later, they made the service available for desktop as well. Since then, Facebook’s involvement in the money transfer industry has only grown, although hasn’t taken off as they likely expected.
Current Partnerships & Licenses
Facebook has been slowly acquiring new licenses for years now. While their online money transfer services do offer plenty of conveniences, they are only available in a few select countries. As of June of 2019, you can only use Facebook Messenger to send or receive money in the US, the UK, or France. There are other specific circumstances in which you can transfer money to someone located elsewhere. The thing is that these circumstances don’t apply to most people.
In some cases, people from other countries can take advantage of Facebook’s simplicity for money transfers. For example, Canadians can send money internationally by using TransferWise’s integrated service on the messenger platform.
Most American jurisdictions allow you to use Facebook Payments Inc. to send and receive money for personal reasons. The simplest way to send money using Facebook is currently through their messenger app. However, this could all change very soon…
Libra – A game changer?
Facebook’s most daring adventure in the financial space is their new cryptocurrency, Libra. Libra is being hailed as the service that will change the way you interact with money. If you look at the list of Libra’s initial backers, you’ll notice a curious lack of banks. There is a good reason for this, as many eyebrows have risen thinking about how Libra could shake up the existing financial services marketplace.
The social network is offering users (of which there are well over two billion) a world where the middlemen (banks) are removed from the money transfer process. Libra will be able to provide instant money transfers at almost no cost. If the currency can become even somewhat widely adopted by Facebook’s user base, it will change the money transfer game. The only real obstacle to this change is the challenge of regulations.
Libra’s primary strong point is the way it will affect remittances. Remittances (people sending money to their family from abroad) provide a huge industry with massive revenues. Because Libra is a cryptocurrency, its legal status is completely different from any fiat currency. Countries like the Philippines, where many people rely on remittances, will have to face the challenge of controlling inflation. In countries with strict capital controls, Libra could cause quite a stir.
Ultimately, if Libra becomes a success, it would disrupt the international payments and money transfer industries. It would also be a huge validation to cryptocurrencies, which would receive a boost of their own.
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