Facebook will enter the world of finance once and for all. Through Libra, its own virtual money, the social network will allow billions of users to carry out financial transactions.
Follow this article all about the topic and learn how your business can be impacted! Developing your own virtual money is undoubtedly one of Facebook’s most important initiatives. In addition to creating a new source of revenue, Libra will change the way users engage with the group’s platforms.
Despite speculation, there are still few official announcements on the subject. However, Libra is already a reality, and the promise is that it will be available in the first half of 2020. Therefore, the way of doing business is constantly changing. And new systems emerge through big companies like Facebook. Therefore, small and medium-sized companies need to adapt. Knowing this, we created this content for you to understand how Libra will work. Also, how it can impact the day to day of your business. Good reading!
New Virtual Money
Efforts to create their own virtual money did not start today. Facebook has been recruiting financial companies and companies from the online market for some years now. For example, Visa, Mastercard, Spotify and Uber act as strategic partners in launching their new cryptocurrency. There are already 12 companies that together form the Libra Association group. That is a kind of consortium to regulate the price of the new currency.
The group’s main challenge is to keep the asset’s value stable. Therefore, preventing the currency from being volatile, as with bitcoin, for example. For this, the currency of the new virtual money must be based on fiat currencies, such as the dollar or euro, protecting against sudden fluctuations.
Facebook says it is exploring new applications related to cryptocurrency technology, including blockchain, which allows it to keep shared records of financial transactions without relying on payment companies.
As a result, credit card companies may also be affected since the new virtual money would dispense with payment processing fees, which are now responsible for generating revenue for card companies.
Separating Financial And Social Data
Amid so many controversies related to data privacy, Facebook said that the financial information used in Libra would not be used to target ads on the platforms.
Therefore, Facebook will create its subsidiary digital wallet, called Calibri. Consequently, users will use it to store Libra and make transfers and payments. In this way, the Libra Association will be completely independent of advertising operations and vice versa, which avoids any problems in the regulation of the new virtual money.
How Will Libra Impact Small And Medium Businesses?
The new virtual money will be available to anyone with a smartphone with internet access. That is, operations with Libra can be carried out between consumers and companies from different countries at any time.
Overall, Facebook’s goal is to get people to spend more time on their platforms. Therefore, the launch of Libra will allow 2.7 billion users to make purchases more easily from one of the 90 million companies that advertise on their platforms.
The reasoning is simple: the more people shop on Facebook, Instagram, Messenger and WhatsApp, the more likely companies will buy ads on these platforms. So why not create a single virtual currency that makes it easy for everyone?
Ease Of Financial Transactions
Therefore, Libra will more easily include emerging countries in its financial transactions. By offering an online currency linked to a social network, money tends to move faster between countries, especially when there are fewer people with accounts opened in banks or making purchases online.
On top of that, with this new system, Facebook still stops its dependence on payment companies. When a user sponsors content or makes ads on social networks, he pays through companies such as PayPal or Visa. With the arrival of new virtual money, these companies will no longer be needed to complete transactions.
Therefore, it is high time if your company is not yet present digitally, even because social networks are an excellent opportunity to facilitate business. Even more so, with new actions like this one, they are being created. Getting people to spend more time on social networks and consuming products and services also benefits you, small and medium businesses.