Facebook's Libra digital wallet: what it could mean for marketers
Facebook Libra: The company plans to launch a digital wallet in 2020, setting the stage for global e-commerce opportunities.
Facebook Libra: Facebook announced it will launch a financial subsidiary called Libra in 2020, which will include a digital wallet offered as a standalone app and integrated with Messenger and WhatsApp.
The digital wallet will allow global users to conduct financial transactions using Facebook Libra, the newly founded currency based on blockchain technology and backed by Facebook and a number of leading financial, technology and venture capital firms including Mastercard, Uber, PayPal and Andreessen Horowitz. Libra is governed by the Libra Association, which was formed to help launch the currency and developer platform. Each founding member, including Facebook, has a single vote on governance issues.
Facebook with Facebook Libra is still in the early stages of this effort. For privacy reasons, the company has said that it will not share user account information or financial data with third parties without a user's consent. Facebook also said that Libra's user data will not be used for advertising purposes on Facebook's platforms. However, that doesn't mean there won't be an impact on advertisers.
Facebook wants to do more advertising business with Libra.
Even without using Facebook Libra data for ad targeting purposes, Facebook expects its entry into the cryptocurrency market to have a positive impact on ad revenue.
"If more commerce happens, then more small businesses will sell more on and off platform, and they'll want to buy more ads on the platform so it's good for our ad business," Facebook vice president of blockchain David Marcus said during a briefing in San Francisco reported by TechCrunch.
Forrester analyst Meng Liu agrees that Facebook's scale project has far-reaching implications, essentially creating a shopping ecosystem within the company's app family.
"Businesses will be able to buy and sell products on their platforms without having to use third-party digital payments over the internet or in-store," Liu told Marketing Land. "For brands on the Facebook platform, they may be able to use Facebook's cryptocurrency to pay more easily and effectively, which may even include cross-border e-commerce payments."
Creating global e-commerce opportunities
Marketers are paying attention to the cross-border payment options Facebook's Libra will offer.
"It's an opportunity for Facebook to bring e-commerce to developing countries where they don't have stable currencies or payment methods," said Steve Weiss, president of digital marketing agency MuteSix, "I think it could be a great opportunity for e-commerce advertisers to reach new consumers internationally while increasing the amount of time they spend in Facebook's app family."
Josh Thompson, senior paid social media strategist at digital agency Portent, echoed Weiss' comments, saying, "The digital wallet will give more than 1 billion people around the world who don't have bank accounts the ability to buy online."
Potential barriers of Libra
Whether Facebook will be able to drive global e-commerce within its apps via Libra depends entirely on the success of Libra, the cryptocurrency it is helping to develop.
"Privacy issues, customer trust issues, regulatory uncertainty, the absence of China and many other strict cryptocurrencies, regulated countries, other competing but more mature "good enough" technologies are all major barriers that Facebook must overcome," Liu said, "Even if it can succeed, it will be a long-term project."
Forrester analyst warns brands to be cautious but prepared for Facebook's upcoming digital wallet.
"Don't overestimate the impact and benefits, but be ready to have reliable anti-money laundering, anti-fraud and knowledge mechanisms of your customers to prepare for Facebook's disruptive but insecure digital wallet project," Liu said.
The biggest critics of cryptocurrency
Creating a way for global users to connect with - and buy from - brands regardless of geography could dramatically impact Facebook's business model and further cement its dominance as a social platform. But things won't exactly go smoothly for Facebook in the coming months.
Within hours of Libra's announcement, U.S. lawmakers called on Facebook to halt its cryptocurrency plans and asked company executives to testify before Congress to address privacy and security concerns related to the company's plans to launch a digital currency.
The U.S. isn't the only country fighting back against Project Libra. India, Facebook and WhatsApp's largest market, recently proposed legislation that not only bans cryptocurrency, but also includes a bill that proposes a 10-year prison sentence for anyone who trades in cryptocurrency.
Facebook told TechCrunch that it has no plans to launch Libra in countries where it currently has no presence - including China, North Korea and Iran - and that the Libra blockchain will be global, but whether or not users have access to it will be left up to custodial wallet providers, who can decide where to operate and where not to.
If Libra will be a success
Much depends on the success of the Libra cryptocurrency for Facebook. But, should it succeed, marketers are ready for the additional e-commerce and customer experience opportunities it could provide.
"It's a way for Facebook to keep users on its platforms - Instagram, Facebook, WhatsApp - longer, while also increasing conversion rates for e-commerce advertisers because it's expected that consumers will check out with scale coins and it will be a seamless experience," Weiss said of Facebook's cryptocurrency launch.
Thompson also sees the potential for higher conversion rates and a more seamless user experience when transacting through a Facebook-owned digital wallet: "Right now, most websites have a poor user experience and aren't optimized for mobile compared to Facebook's app network."
Thanks to Marketing Land for the article.