Digital payment is a way of doing payment which is made through digital modes. It is also called electronic payment. In digital payments, payer and payee both use digital modes to send and receive money.
In today’s digital era, our dependency on smart phones exceeds the wildest expectations. Millennials eat, live and breathe smartphones. In fact, the use of wallets has declined ever since mobile phones introduced e-wallets. Carrying change and holding cards has become a fad of the past. Digital payments have been ingrained in the way people perform transactions today.
The Digital Payment Services
The digital payments service sector is growing big, Top tech firms are coming up with services of their own. Amazon with amazon pay, Ola money, Apple’s Apple pay and google with Google Pay are amongst the latest offerings. The emergence of mobile wallets wasn’t an overnight phenomenon. Peter Thiel and Elon Musk’s PayPal was an early initiative. It paved way for several others.
India is not far away in terms of cashless economy, homegrown apps like Paytm and PhonePe cater to millions. Paytm launched the first active digital payment services in India. It was started in August 2010 by Vijay Shekhar Sharma and was no less than a disruption. Around 130 million people use Paytm services in India. Recently Facebook announced Facebook Pay which will be available on Instagram, WhatsApp and Facebook.
Cryptocurrency a digital asset is being touted as the next step in digital payment services. Facebook has taken a step in this regard as well. Libra is Facebook’s cryptocurrency. Mark Zuckerberg claims Libra to be the future of banking and transactions, “Libra is a permissioned blockchain digital currency proposed by the American social media company Facebook.” Libra’s initial release is planned in 2020.
With Facebook’s Libra, Mark Zuckerberg wants to disrupt the way how money works. But such initiatives are riddled with issues. Several lawsuits followed. To regulate the working of Libra, it shall be monitored by an independent association called Libra Association governed by organizations like Uber, Lyft, PayPal, VISA, MasterCard etc. Facebook will be maintain a cryptocurrency wallet called CaLibra. Though Facebook mentions this will be maintained separately and will have no effect to privacy, many people don’t believe it.
What is Facebook's Libra?
“Libra is a global cryptocurrency built on blockchain to promote financial inclusion. Libra is digital, mobile, stable, fast, cheap and secure”. An organization independent of Facebook would oversee Libra. CaLibra, the mobile wallet to hold Libra, would be integrated in all the apps owned by Facebook like WhatsApp, Instagram, and others. Transactions done with Libra would be same as PayPal or any other medium available today.
The money from your bank account can be transferred into CaLibra that you can use at shopping malls and online stores. You can also get back your money i.e. Libra to physical money from the Libra authorized people. But how Libra currency would be exchanged and the way in which transactions are to be executed begs reasoning.
The whole Libra blockchain is organized and maintained by a 28-member strong Libra association comprising Uber, Lyft, VISA, Mastercard, eBay Vodafone etc. It is a non-profit organization with its main office at Geneva, Switzerland.
Each member needs to give $1 million to get one vote in the organization. The organizations will elect a representative to oversee the Libra council. Whenever you add money to your Libra account, it goes into the giant Libra reserve which in turn gives you Libra tokens. The value of Libra stays the same irrespective of volatilities in a country’s economy.
Facebook’s crypto shall cut down transaction fees and establish a global currency. Financial irregularities and hassles in transactions would become a talk of the past.
Issues With Libra
Like the concerns and question marks accompanying any major announcement, troubles arose for Mark Zuckerberg’s Libra initiative. In the first week of October, PayPal become the first to step out of the Libra association. The reasons for withdrawal are not known yet. eBay, Stripe and Mastercard followed PayPal by leaving Libra Association.
Soon, Mark Zuckerberg was summoned by the US Congress. He asserted the launch of Libra will not be done without the approval from US regulators. Zuckerberg further emphasized on the need to take risk via innovation for ensuring US continues as the global leader. France and Germany blocked Libra and amended certain laws. Many banks and law makers are also changing rules related to monetary transactions.
After these issues, Facebook began losing momentum on Libra’s launch. With the series of events Libra faced, it’s clear that the world still holds scepticism on online payments and digital currency transactions through payment apps.
While the certain parties continue to loath cryptocurrency, the tech of future is undergoing improvisation. More complex algorithms ensuring hack proof network and high privacy-oriented transactions will catalyse the acceptance of cryptocurrency. The future of digital payment services, though shrouded with negativity and hesitance at present, will stay for decades to come!