Shopify signs up to the Libra cryptocurrency 🤑

After eBay, Visa, Stripe and other big-name partners such as PayPal, Vodafone and Mastercard left the Libra Association, Facebook's new cryptocurrency has gained a heavyweight member: Shopify has just signed up and is contributing at least ten million dollars to the network's development.

If Libra can deal with the concerns of international regulators (which are currently stopping this new form of money transfer from being fully rolled out), Shopify could genuinely offer its users a new way to process payments and receive money without paying the usual bank fees.

Libra was designed to move money between digital wallets with few or no fees. The original idea behind Mark Zuckerberg's platform was to offer a way to send money that would work inside Messenger or WhatsApp, for example. This could indeed help Shopify save money, as well as the platform's online store owners, who already number around a million.

Shopify's spokespeople have explained why they joined the association: they want to help merchants cut their spending on fees and increase business opportunities in developing countries. "Much of the world's financial infrastructure was not built to handle the scale and needs of online commerce," reads the official statement.

The announcement goes on: "Our mission is to make commerce better for everyone, and to do that we have spent a lot of our time thinking about how we can do it in parts of the world where money and banking could be much better. (...) As a member of the Libra Association, we will work collectively to build a payment network that makes access to money simpler and supports merchants and consumers everywhere. Our mission has always been to support the entrepreneurial journey of the merchants who use our platform, who number more than a million. That means fighting for more transparent fees and for the data privacy of our users' customers. We want to build an infrastructure that gives more power to entrepreneurs anywhere on the planet."

As part of the Libra Association, Shopify becomes a significant operator, gets a vote on the board and could also earn dividends from interest on the cryptocurrency, in proportion to its buy-in, which is at least ten million dollars.

The Libra group had already lost much of its e-commerce expertise when several members decided to leave the project in October last year, because of tight scrutiny from regulators. Those leaving included companies linked to more traditional payment methods, such as Visa and Mastercard, online processors such as Stripe and PayPal, and a marketplace giant, eBay. These departures raise a question: does Libra have the right members to get the cryptocurrency accepted in most of the world and make it genuinely useful to people?

While it works to convince regulators that Libra is completely safe, Facebook has also been working on other payment methods, including Facebook Pay and WhatsApp Pay, which run on traditional bank transfers or credit cards.

In a tweet, the CEO of Shopify said that joining the Libra Association reflects the platform's wish to make commerce better around the world. "We are very proud to welcome Shopify to the Libra Association. As a multinational commerce platform, with more than a million businesses in around 175 countries, Shopify brings us the knowledge and experience the project needs," wrote Dante Disparte, head of communications at the Association.

"Shopify joins Libra's active group of members and is committed to building a global payment system that is safe, transparent and consumer-friendly, and that breaks down financial barriers for billions of people."

The key hire

But by all accounts, it was a recent hire that ended up bringing the two companies together. Kaz Nejatian, Facebook's former product director (essentially the person in charge of everything to do with payments), became Vice President and General Manager of Shopify in September.

Managing and running an e-commerce store can be hard, or almost impossible, without a traditional bank account, especially in some developing countries. Libra could let these merchants set up a digital wallet where payments arrive instantly, with no bank fees. And, in theory, that "digital" money could be withdrawn from any ATM at the local exchange rate.

But for that to happen, the Libra Association will have to convince the government of the United States, the European Union and many other bodies that it will in no way help terrorist organisations launder money, erode users' privacy or weaken nations' power within the global financial system.

The French Finance Minister, Bruno Le Maire, has already said that countries' monetary sovereignty will undoubtedly be at risk because of this privatisation of money, and so he does not in any way support allowing Libra to be developed and rolled out on European soil.

With operations and launch planned for 2020, no date has been set yet. We will just have to wait and see.