Visa Inc., Mastercard Inc., merchant processor Stripe Inc. and online marketplace eBay Inc. said Friday afternoon they will not join the Facebook-backed Libra cryptocurrency project. The defections came a week after PayPal Holdings Inc. became the first of the Libra Association’s 28 tentative members to withdraw in the face of strong criticism from regulators and lawmakers in Europe and the U.S.
The companies bailed just ahead of a scheduled Oct. 14 meeting of the Switzerland-based Libra Association. The misgivings expressed by public authorities, which apparently spurred the defections, center on the potential of a privately-backed currency tapping social network Facebook Inc.’s massive user base to undermine official currencies, as well as security and privacy. Bloomberg reported that Mercado Pago, the payments unit of the Argentina-based Mercado Libre online marketplace, also was quitting.
Dante Disparte, head of policy and communications for the Libra Association, said the association plans to carry on despite the loss of the early backers.
“We appreciate their support for the goals and mission of the Libra project,” Disparte said in a statement. “We are focused on moving forward and continuing to build a strong association of some of the world’s leading enterprises, social-impact organizations, and other stakeholders to achieve a safe, transparent, and consumer-friendly implementation of a global payment system that breaks down financial barriers for billions of people. Although the makeup of the association members may grow and change over time, the design principle of Libra’s governance and technology, along with the open nature of this project, ensures the Libra payment network will remain resilient.”
Facebook, which spawned the Libra project as a payments service capable of reaching underbanked consumers worldwide, referred inquiries to the association.
Companies that decide to join Libra formally have been asked to put up $10 million apiece. Payments analyst Jordan McKee of New York City-based 451 Research says Libra is losing most of its planned payments-industry participants early on.
“The tires are beginning to fall off Libra at a very critical juncture in its evolution,” McKee tells Digital Transactions News by email. “The initial supporters Libra has lost are large and important entities that would have played an invaluable role in helping the initiative get off the ground. With PayPal, Stripe, Mastercard, and Visa now out of the picture, Libra has lost virtually all of its support from the payments industry. PayU remains the only payments company left onboard at this time.”
A Visa spokesperson said by email that “Visa has decided not to join the Libra Association at this time. We will continue to evaluate and our ultimate decision will be determined by a number of factors, including the association’s ability to fully satisfy all requisite regulatory expectations. Visa’s continued interest in Libra stems from our belief that well-regulated blockchain-based networks could extend the value of secure digital payments to a greater number of people and places, particularly in emerging and developing markets.”
In a statement, Mastercard said it “has decided it will not become a member of the Libra Association at this time. We remain focused on our strategy and our own significant efforts to enable financial inclusion around the world. We believe there are potential benefits in such initiatives and will continue to monitor the Libra effort.”
And San Jose, Calif.-based issued a statement saying “we highly respect the vision of the Libra Association; however, eBay has made the decision to not move forward as a founding member. At this time, we are focused on rolling out eBay’s managed-payments experience for our customers.”
The Dow Jones news service reported that San Francisco-based Stripe also said it is withdrawing. A Stripe spokesperson could not be reached for comment.