Facebook is set to get involved in payments; Libra is a new cryptocurrency that will roll out in 2020. You'll be able to pay people easily via a standalone app or via WhatsApp or Messenger.
But Libra isn't entirely a Facebook effort as you'll hear and it isn't designed as a replacement for current currency - instead, it's designed to bring digital payments to those who don't have them currently and create a way of doing cheaper transactions across borders.
What is Libra?
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 "moving money around the world should be as easy and cheap as sending a text message". It'll be designed to be scalable, secure and fast and will be with us in 2020.
Coincidentally, the name Libra comes from the Roman measurement of weight - its why we measure pounds of weight in lbs.
The partners are varied and large. Founding members include Visa, Mastercard, PayPal, eBay, Stripe, Lyft, Uber, Vodafone and Spotify in addition to Facebook's Calibra. These companies will have invested at least $10 million in the foundation - essentially forming its initial cash reserves. Each company will then form one of the nodes - essentially a bunch of servers - that will run the currency'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 don'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 "for a low fee". Local regulations will also have to be obeyed where Libra operates - it's not clear where the currency will launch initially.
What's Facebook's input?
Facebook has established a standalone subsidiary called Calibra - yes, potentially confusing. Calibra will basically be a digital wallet that will use the Libra currency. Calibra will have its own standalone app but you'll also be able to use it to pay people within Messenger and WhatsApp as well as - presumably - Facebook itself. You can sign up for updates and be one of the first to use it at the link above.
Think of Facebook's Calibra effort as a competitor to PayPal - even though PayPal is a partner in the Libra organisation.
Of course, Facebook's massive audience - in addition to the audiences of other partners like eBay - 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 doesn't appear to be a dominant one because of the way the foundation is structured. It says that after the currency's launch it will have the same voting rights as other partners.
How will it work?
Calibra will let you send Libra to almost anyone with a smartphone "as easily and instantly as you might send a text message and at low to no cost". 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.
Libra is entirely open source, so while Facebook itself is making a wallet, it's pretty much assured that other wallets will compete with it and might even be more popular.
As we mentioned, there are some fees - there will likely be small charges that will be paid by sellers of goods and services but they may pass them onto the consumer.
What about security implications?
Calibra will keep your account information or financial data separate from Facebook itself "aside from limited cases" - Facebook says this would only be the case "to reflect our need to keep people safe, comply with the law and provide basic functionality to the people who use Calibra". Sounds like quite a lot of cases to us...
Certainly, with Facebook'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 "and we’ll have automated systems that will proactively monitor activity to detect and prevent fraudulent behaviour". 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.
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