But Libra isn8217;t entirely a Facebook effort as you8217;ll hear and it isn8217;t designed as a replacement for current currency 8211; instead, it8217;s designed to bring digital payments to those who don8217;t have them currently and create a way of doing cheaper transactions across borders.
Libra is a not-for-profit foundation (called the Libra Association and based in Switzerland) with a simple rationale of providing a global currency. It says that 8220;moving money around the world should be as easy and cheap as sending a text message8221;. It8217;ll be designed to be scalable, secure and fast and will be with us in 2020.
The partners are varied and large. Founding members include Visa, Mastercard, PayPal, eBay, Stripe, Lyft, Uber, Vodafone and Spotify in addition to Facebook8217;s Calibra. These companies will have invested at least $10 million in the foundation 8211; essentially forming its initial cash reserves. Each company will then form one of the nodes 8211; essentially a bunch of servers 8211; that will run the currency8217;s transactions.
There may also be new ways for companies like Uber or Spotify to pick up new users through partnerships with other founding members or from people who don8217;t have traditional bank accounts. Indeed,Libra says there are 1.7 billion people – 31 percent of the global adult population – who do not have access to an account at a bank, including a staggering 14 million people in the US.
There will still be some fees, but the organisation is talking about making money transfers much more accessible including sending money across borders 8220;for a low fee8221;. Local regulations will also have to be obeyed where Libra operates 8211; it8217;s not clear where the currency will launch initially.
Facebook has established a standalone subsidiary called Calibra 8211; yes, potentially confusing. Calibra will basically be a digital wallet that will use the Libra currency. Calibra will have its own standalone app but you8217;ll also be able to use it to pay people within Messenger and WhatsApp as well as 8211; presumably 8211; Facebook itself. You can sign up for updates and be one of the first to use it at the link above.
Of course, Facebook8217;s massive audience 8211; in addition to the audiences of other partners like eBay 8211; will ensure Libra gets exposure from the off. But while Facebook has a big seat at the table and has been heavily involved in the creation of the Libra Association, it doesn8217;t appear to be a dominant one because of the way the foundation is structured. It says that after the currency8217;s launch it will have the same voting rights as other partners.
Calibra will let you send Libra to almost anyone with a smartphone 8220;as easily and instantly as you might send a text message and at low to no cost8221;. Facebook says that Calibra also hopes to offer people more banking-style facilities like paying bills and contactless payments on public transport and in coffee shops. Apple Pay is clearly in its sights, there, as potentially are other digital-heavy banks like Monzo and Revolut.
Calibra will keep your account information or financial data separate from Facebook itself 8220;aside from limited cases8221; 8211; Facebook says this would only be the case 8220;to reflect our need to keep people safe, comply with the law and provide basic functionality to the people who use Calibra8221;. Sounds like quite a lot of cases to us8230;
Certainly, with Facebook8217;s security reputation at an all-time low it remains to be seen how convincing it can be on the topic. Certainly the creation of Calibra as a separate company is designed to assuage potential criticism. You can read its Customer Commitment here (PDF).
Facebook says that Calibra will be using the same verification and anti-fraud processes that banks and credit cards use 8220;and we’ll have automated systems that will proactively monitor activity to detect and prevent fraudulent behaviour8221;. There will also be live support to help if you lose your phone or password and there will be refunds for fraudulent use of your account.