Not with a bang but, perhaps, with a whimper.
Novi is here, or at least it’s coming. And the question will be whether the new digital wallet, via Facebook, makes a splash in a field that is becoming, well, crowded.
As noted in this space on Thursday (Aug. 19), the Big Tech juggernaut said its Novi digital wallet, which allows for transactions to be done domestically and across borders, is ready to go to market.
Read more: Facebook Announces Novi Is Ready To Launch
The company said in its announcement that it had sought to work with regulators and legislators as it developed the wallet over the span of two years. And in reference to the U.S., it said that it had secured licenses or approvals for Novi “in nearly every state,” and added that “we will not launch anywhere we have not yet received such clearances,” per a blog post from David Marcus, who heads the company’s crypto efforts.
Diving into that blog reveals a bit of the company’s strategy and outlook on the state of the wallet landscape in general — and tellingly, stablecoins, too. The post itself is titled “Good stablecoins, a protocol for money, and digital wallets: The formula to fix our broken payments system.”
Marcus contended in the post that the payments infrastructure is broken, and noted that it takes several days for cross-border payments to settle.
The Novi announcement, it’s clear, is about more than moving money — the fiat kind — more quickly. As Marcus stated, “Let me be clear, if we only offered fiat money in Novi, it would bring people a lot of value. We could offer domestic and cross-border payments, and it would benefit Facebook as we would be creating a significant number of wallet accounts. These in turn would enable us to build a solid merchant services business by charging competitive rates to merchants to accept payments from Novi customers.”
And in what me might term the great wallet debate, consider the fact that, here and abroad the entrenched names are, well, entrenched. Facebook’s own WhatsApp is making inroads for payments, too.
See also: WhatsApp P2P Payments Return To Brazil
Separately, in recent PYMNTS data, PayPal dominates in almost every category measured: shopping online, shopping in-store, by gender and by generation. In terms of headline numbers, we found that PayPal’s mobile wallet was behind more than a quarter of in store mobile transactions; Apple had 15 percent. Online, PayPal’s mobile wallet had nearly half of transactions.
Marcus said that with Novi, that the goal is to bring a new “interoperable protocol” for money — “The fact that we’re participating, as members of the Diem Association, and in other ways, can help bring more companies around a standard, and I don’t want us to waste our shot.”
With a nod toward the stablecoin itself, he said, a “well designed” coin is one that always holds 1:1 reserves on cash at U.S. banks and in very short-term treasuries, “with the issuer holding capital as a buffer.” Stablecoins, of course, are increasingly in the gaze of regulators, central bankers and legislators, which means, too that Diem, which may or may not be on the near-term horizon, will get more scrutiny, too.
“I do believe we deserve a fair shot,” Marcus wrote in his post. The question is, of course, is whether the shot, once taken, is heard round the world, or fades, quietly.