A few days after the Wall Street Journal suggested that some companies announced as initial backers for Facebook’s Libra project were reconsidering their support, PayPal has announced they will end their participation in the Libra Association.
Shortly after that, five more backers are reportedly breaking away: eBay, Stripe, MasterCard, Visa and Mercado Pago, leaving Libra suffering some heavy blows. The exit of the payment giants came as a major setback to Facebook who want to shake up the global payments industry, but have seemingly not done enough planning or research on the global payments market to pull the Libra project off.
The withdrawals follow intense scrutiny from international regulators and politicians, some of which have called for the project to be halt
Who is pulling out, and why?
In a statement on Businessinsider, Ebay expressed its support for the project, but said it would focus on rolling out its own payments products : “We highly respect the vision of the Libra Association; however, eBay has made the decision to not move forward as a founding member”.
And Ebay spokesman also wrote in the emailed statement. “At this time, we are focused on rolling out eBay’s managed payments experience for our customers.”
In a comment to TechCrunch, the payments giant Stripe, one of the most high-profile startups to sign onto the project through its spokesperson leaves the door open for them to potentially work with Libra in the future – but not right now.
And in a separate statement, Stripe said it would consider rejoining the association in the future : “Stripe is supportive of projects that aim to make online commerce more accessible for people around the world. Libra has this potential. We will follow its progress closely and remain open to working with the Libra Association at a later stage.”
A MasterCard spokesperson confirmed that the company will be withdrawing as well. In a statement, the MasterCard spokesperson said: “MasterCard has decided it will not become a member of the Libra Association at this time.”
MasterCard emphasised: ’’We remain focused on our strategy and our own significant efforts to enable financial inclusion around the world. We believe there are potential benefits in such initiatives and will continue to monitor the Libra effort.”
Likewise, a Visa spokesperson said: “Visa has decided not to join the Libra Association at this time. We will continue to evaluate and our ultimate decision will be determined by a number of factors, including the Association’s ability to fully satisfy all requisite regulatory expectations.’’
And, Visa’s continued interest in Libra stems from their belief that well-regulated blockchain-based networks could extend the value of secure digital payments to a greater number of people and places, particularly in emerging and developing markets.
Mercado Pago is the payments arm of Mercado Libra, a Latin-American e-commerce giant, has also dropped out of the project. A longer statement wasn’t forthcoming from Mercado Pago.
A spokesperson for Mercado Pago said the company will re-evaluate Libra after there is “greater clarity” around the project.
According to theverge, Facebook unveiled its vision for Libra in June 2019, announcing an ambitious project aimed at providing banking services to more than 1 billion individuals who currently lack access.
However, the project saw immediate pushback from lawmakers worldwide, with German and French officials vowing to block its launch and the chairwoman of the U.S. House Financial Services Committee Maxine Waters calling for a moratorium on development until the project’s regulatory hurdles are cleared.
However, David Marcus, Facebook’s lead executive on the Libra project, wrote on Twitter that he “would caution against reading the fate of Libra into this update’’ and “of course, it’s not great news in the short term, but in a way it’s liberating’’. The tweets continued: “Stay tuned for more very soon. Change of this magnitude is hard. You know you’re onto something when so much pressure builds up.”
It will be interesting to follow closely what happens next in the Libra story, one thing is for sure, Blockbasis will follow it closely!