Libra gains new payments industry support, but its battle is far from over
Facebook’s Libra cryptocurrency has been climbing uphill from the start, losing many prominent partners along the way — though the recent addition of Checkout.com will partially make up for those setbacks.
Checkout.com said it has joined the project, which hopes to launch by the end of 2020. The London-based Checkout.com offers digital payments, and recently acquired ProcessOut, giving Checkout.com a data analytics platform to combine with its payment gateway and a roster of more than 700 clients that includes Samsung, TransferWise and Adidas.
The roles of Libra’s partners have not been well defined, though they come from different industries and as such would provide expertise and potential cover for regulators and politicians, which have been notoriously hostile to Libra.
Checkout.com would provide welcome support from the fintech and payment worlds. The company did not comment on its Libra announcement beyond a statement from founder and CEO Guillaume Pousaz saying Checkout.com's staff are “technologists at heart and have always been fascinated by blockchain and the potential benefits it could bring to global transaction processing.”
Pousaz also mentioned the need for regulation to protect the blockchain system from systemic abuses. Libra’s relationship with regulators has been its main challenge, as it faces fears that Facebook will use the project to circumvent monetary policy.
Libra has made several concessions to appease regulators, most recently changing its stablecoin structure to tie the project more closely to central bank policy. It also expressed a willingness to work with central banks on digital currency projects. The recent changes to Libra's structure provide both single-currency stablecoins and the multicurrency Libra Coin.
Libra's management did not provide details on Checkout.com's participation by deadline. Checkout.com "joins a dynamic and growing group of Libra Association members committed to achieving a safe, transparent, and consumer-friendly implementation of a global payment system that breaks down financial barriers for billions of people,” said Dante Disparte, head of policy and communications for the Libra Association, in an email.
Following the early political opposition, the Libra initiative lost about a half-dozen original members, including international and recognizable payment firms such as PayPal, Stripe, eBay, Visa and Mastercard.
“This design change enhances the utility of the Libra payment system and means it will be more accessible in countries around the world with greater support for a range of domestic use cases,” said Joe Lallouz, CEO of Bison Trails, a New York-based company that offers a platform for firms that want to link to blockchains.
Bison Trails is a founding member of Libra, and contends the project can address pain points on the cost and slow speed of international money transfers. Bison Trails is one of the few crypto native companies that are part of the project.
“Libra’s launch can move the world much closer to the mass adoption of cryptocurrency, potentially triggering a global inflection point towards decentralization,” Lallouz said. Bison Trails would not comment on the pandemic’s impact on the project.
Even with new payment technology support and its recent changes, Libra will still face challenges.
The coronavirus pandemic has stressed all industries, and has created momentum for central bank policy to digitize currency that serves the same universal access and inclusion goals behind Libra.
“Most still consider Libra a Facebook product so the suspicions follow,” said Tim Sloane, vice president of payments innovation at Mercator, suggesting a model similar to Evernym, which donated its IP to create the Open Source Hyperledger and the nonprofit Sovrin Foundation. The Sovrin Foundation has ties to multiple projects, including federated digital identity initiatives to support mobile commerce.
“The [Sovrin] governance body has representatives from multiple countries and markets and has an open and documented structure that will decide which use cases will be supported,” Sloane said, adding Libra’s structure should make it clear Facebook has no favored position.