In the aftermath of Facebook The unveiling of Libra and his Calibra wallet, among the many questions asked, was how it succeeded in getting so many of the “who’s who” in payments to the table. That was the question that Karen Webster wanted PayPal Chief Operating Officer Bill Ready when she heard that PayPal was one of those players.
The vision, she agreed, is undeniably large and bold and focused on a worthy goal: the inclusion of 1.7 million people worldwide who do not have a bank and exist on the financial margins of society.
However, as she noted in her commentary on Libra’s probability of meeting her high expectations, the climb to get there will be incredibly long, steep and hard. These 1.7 billion non-commercialized consumers are notoriously difficult to reach for a number of well-known reasons: inspiring inflammation in payment platforms is always incredibly challenging and regulators have made no secret that they are less than charmed by this idea.
Not to mention, she noted that regulators around the world have a long, proud history of transferring to cryptocurrency-schemes & because they are basically not interested in sharing control over the money supply.
Ready agreed. There will be many rounds of talks with regulators that will have to take place, with many details to be determined, and many problems that have not yet been solved will probably be solved.
For PayPal, however, he said the decision was simple. One of the main reasons why the platform exists is to serve the least-favored and non-banking world-wide and to work with global infrastructure providers to make that possible. The opportunity to be an early part of the Libra Association, he noted, was to build the next generation of infrastructure to reach that last part of humanity that has no bank.
“This does not happen overnight,” Ready told Webster. “If you look at these places with a high concentration of the uncovered, there are things we can do, but it goes beyond any player.”
But by working together (if done correctly, Ready noted), it could not go beyond the joint efforts of many players.
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A study of almost a third of the human population that does not have access to the banking system shows how difficult it is to serve them. PayPal, he noted, has turned this into a 20-year project – with much progress in areas where there are infrastructure providers with which it can work as a technology company to promote the cause of digital financial services and to provide more broad access. However, if a company tries to reach the last remaining third, there is (almost) no infrastructure to build.
“That is the potential promise in Libra currency, where several major players come together to contribute their expertise and access, because the creation of an underlying infrastructure of financial services and digital payments is greater than that of those players,” he said.
In fact, it is Ready, it is larger than two or three players working in succession. This is a truly multilateral effort with many moving documents and a great need for checks, balances and overview.
“The purpose of the first days of Libra is to agree on a generally accessible infrastructure and a set of standards that cannot be managed by a player, or that are only beneficial, but that open something that many can benefit from”, he said. added
Ready during the interview noted that achieving success will not be a quick process. In the following year alone, pending the launch of the first interactions and customs in 2020, the process of writing a charter and creating those common standards will be a tough task.
There will also be a minor problem with legal obstacles. It is noteworthy that on hearing the news, almost all supervisors who made comments said something similar.
Yet, Ready noted that this is all part of a process and part of the value that PayPal and other established players – with a long record of maintaining positive regulatory interactions – involve in the partnership.
“There will be many things to answer because we communicate with regulators around the world, especially around AML / KYC,” he said. “But we think there are good answers to that and I think that this will be part of the broad conversations we have with legislators.”
The potential profit
Infrastructure, clearly listed, is easily overlooked if one lives in the developed world. Things like the Federal Reserve or ACH networks are not part of people’s consciousness because they are just there and they just work. Infrastructure is generally not as exciting for people and does not immediately stand out as being immediately realized.
However, when someone takes a step back and looks at the almost infinite number of things that are on top of those infrastructural pieces (and the extraordinary number of business models built from them), a person’s perspective of the monetary value of that infrastructure is likely to cause some shifts.
“Libra is about tackling and creating basic infrastructure where it’s not there first. But from there you can, if you can offer that, get the opportunity to generate a lot of income with many different players, in the same way as you would in developed markets, “he said.
How that will work and function exactly, he noted, is still developing. Yet the long-term vision offers room for a lot of differentiation in what comes next, built on top of the scaffolding of the Libra. There are many moving parts there, and more questions that still need to be answered. However, those answers, PayPal has determined, are worth finding.
“We think that what we can create together will be worth it,” he said.