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14 October 2019
INVESTMENT

Facebook's Libra loses Mastercard, Visa in cascade of exits

The defections followed fierce criticism from global regulators as well as lawmakers and has prompted some industry-watchers to question whether the Libra programme can survive.

VISA AND MASTERCARD DEBIT AND VISA CARDS/BLOOMBERG


Facebook’s effort to create a cryptocurrency was dealt a blow when several key partners such as Mastercard, Visa as well as eBay, Stripe and Mercado Pago, abandoned the project, reported Bloomberg.

The news comes days before the Libra Association, the group that will oversee the digital currency, prepares to convene its members and ask them to sign a charter agreement. The meeting is slated to take place in Geneva.

In a statement, Libra Association Spokeswoman said that the group was focused on moving forward and continuing to build a strong association as it worked to create a safe, transparent, and consumer-friendly implementation of a global payment system that breaks down financial barriers for billions of people.

Visa stated that the company would continue to evaluate whether to join in Libra in the future and its ultimate decision will be determined by a number of factors, including the association’s ability to fully satisfy all requisite regulatory expectations.

When Facebook launched plans for Libra in June 2019, a critical part of its pitch was that major players in the payments and tech industry were supporting it. The cryptocurrency would be run out of Geneva by the organisations that comprised the Libra Association, not solely by Facebook. But now that that alliance appears to be eroding, the project’s future is uncertain.

Facebook has faced fierce backlash since the company announced plans for Libra. Politicians and regulators around the world have called on Facebook to halt its progress and some have suggested Libra could be used for illegal money laundering or trafficking schemes.

Despite the scrutiny from public officials and the exodus of partners, Facebook remains committed to Libra. Some people inside the company think the defections are partly driven by established payments providers worrying about a new entrant encroaching on their turf.

In a statement, Mastercard said that it will remain focused on its strategy as well as significant efforts to enable financial inclusion around the world, adding that there are potential benefits in such initiatives and will continue to monitor the Libra effort.

Payments giant Stripe, one of the most high-profile start-ups to sign onto the project, signalled that it remained open to working on it in the future.


RELATED STORIES: STRIPE VISA MASTERCARD FACEBOOK LIBRA EBAY MERCADO PAGO


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