The Full Article was Originally Posted on CoinCentral.com authored by ELIZABETH GAIL
Facebook is reportedly working on a cryptocurrency money
transfer application that will be integrated into WhatsApp. The service, which
is set to be launched in India upon approval, will apparently target the
remittances market.
According to Bloomberg, WhatsApp is developing a stablecoin for the project,
and its value will be pinned to that of the U.S. dollar. A stablecoin will be
able to overcome the huge price swings that affect the value of digital
currencies such as Bitcoin whose rates can shift by over 10 percent within 48
hours.
Facebook has been carrying out research related to blockchain and digital coins
for some time now. In May, it put together a research unit headed by former
President of PayPal, David Marcus. He is currently also Vice President of
Messaging Products at the company. The group currently has about 40
researchers. Marcus is believed to have played a key role in the company’s
latest crypto venture.
The Facebook exec has previously talked about the prospect of bringing
cryptocurrency payments to Facebook Messenger and pointed out a few drawbacks.
In his view, high transaction fees and slow processing times would definitely
hinder widespread adaptation of such a feature. He was, however, optimistic
that the cryptocurrency community would in time come up with solutions that
would make a crypto payment integration feasible.
Facebook is reported to be on a hiring spree to build up its crypto-blockchain
research and development team, which is currently comprised of former PayPal
and Instagram execs. Some Facebook employees have also been recruited and
including Geoff Teehan, who is Head of Product Design and Morgan Beller, a
member of the Corporate Development team at the company.
Why Crypto Payments in India?
India tops the list of countries with the highest volume of cash remittances
from abroad. Figures from 2017 stand at about $69 million, according to a
recent World Bank report. This was a 9.9 percent increase from the previous
year. Total global remittance figures reached $613 billion in 2017.
Facebook is thought to be targeting this market with its WhatsApp crypto
application. India currently has over 200 million WhatsApp users. The
application also has a market penetration of about 28 percent, according to
data from Statista.
WhatsApp Has Been Pushing for a Payment Service Approval
WhatsApp CEO, Chris Daniels, was recently reported to have sent a letter to the
Reserve Bank of India requesting to extend payment services to its users in the
country.
The letter, which is dated November 5, sought for the approval of a BHIM UPI
(Unified Payments Interface). The company is reportedly also working with the
National Payments Corporation of India (NPCI) to fulfill regulatory
requirements and has already started to implement recommendations from the RBI.
They include data storage requirements that oblige the company to provide
unfettered access of payments info to the RBI. The proposal is still awaiting
approval.
In February, WhatsApp began testing its payment platform in India. The project
was undertaken in conjunction with ICICI Bank. Around 700,000 users reportedly
took part in the program. The rollout was postponed after the Cambridge
Analytica scandal exploded. It led to serious privacy concerns that prompted
the Reserve Bank of India to issue a new directive targeting data storage and
access requirements forcing the company to remodel the project.
A crypto-payments system approval from the Indian government would make
WhatsApp a leading funds transfer platform in the country.
The Impact on the Remittances Market in India
A cryptocurrency remittance feature is likely to lead to reduced costs in
transactions, as well as, faster processing as opposed to conventional modes of
money transfer. Regular cash transfer platforms charge transaction fees that
can reach and exceed 5 percent of the total figure transacted. Making
cross-border payments can attract a currency conversion fee.
In many cases, the process can take a few days for the funds to reach the
recipient. On the other hand, cryptocurrency transaction fees are usually
extremely low. TRON transactions, for example, only lead to a fee of about
$0.0000901, while Monero trades cost about $0.01. This is according to data
obtained from Bitinfo Charts.
Tether, which is the most popular stablecoin by market trade volume, does not
charge any rates for transfers but applies withdrawal charges.
Featured Image Credit: Pixabay
