Over the last few years, the much-debated issue of online-platform is “The importance of cryptocurrency and its impacts on the M-commerce”. Cryptocurrency – an innovative, rebellious and futuristic way of transacting has ultimately turned into a noteworthy payment method. Nowadays, most of the smartphone shoppers keen to use cryptocurrencies, as a result, it became essential to explore and integrate the cryptocurrency payment methods into their business model for both online as well as offline commerce firms.
And the rumors are true! Facebook – the social media giant launching its own cryptocurrency in the first half of 2019. The move will surely make Facebook as the vanguard in the M-commerce industry and place it in the competitive position against Visa, PayPal, and MasterCard.
Facebook’s Terrible 2018
Though it might sound crazy, especially in the context of 2018, arguably the most terrible year for Facebook as it staggered from one scandal to another. The Cambridge Analytica data breach, the Russian election – 2016 propaganda, and the misuse of its platform during violence against Rihingya Muslims in Myanmar, prompted the Facebook users to trend #DeleteFacebook and urged them to delete their account.
However, it is important to note that amid this crisis, Facebook quietly worked on launching of an in-house startup to explore the ways in which the firm can leverage the power of blockchain and cryptocurrency. The firm appointed a team of around 40 highly expertise people with several former key PayPal executives, headed by David Marcus, Head of Facebook Messenger and former President of PayPal. As per the reliable sources, the team worked under the highly secretive atmosphere and forced to sign NDA’s to safeguard the details of the project.
During early March, Facebook finally went public with the announcement of their first crypto product – a digital stable coin – to be used for remittance payments. Primarily, the firm will focus on the Indian ecommerce market and enable the WhatsApp users to transfer money on an instant basis. The reason behind this move is pretty simple – India is by far Whatsapp’s largest market with more than 200 million monthly active users and also one of the biggest markets for remittance as it represents over 10% of the $613 billion global remittance market. The captivation of such large market through quick fund transfer and lower transaction cost would be a winning real-world use case.
The Bigger Perspective
After experiencing the shocking year, Facebook is ready to rebuild customer trust and what would better than a promised privacy-first approach that would address the firm’s immediate shortcomings! By aspiring to offer several diversified services on one platform, Facebook wants to be the WeChat of the world outside China.
With more than 1 billion monthly active users in China, WeChat is regarded as “app for everything” or “super app” and allows the users to access services like sending of text/voice messages, sharing things on social media, following celebrities & brands news, booking of public transports, ordering food delivery, buying movie tickets, playing casual games, transferring of money, paying bills, getting banking statements, accessing of fitness tracker data, booking doctor’s appointment, finding Geo-targeted coupons, recognizing music, reading books/magazine, meeting strangers around you, and much more.
Over and above that, Facebook would love to diversify its advertising-only revenue model into a payment-based and transaction-based revenue model and leverage its 2.5 billion active user base. To turn this aspiration to reality, the world trending Indian market would be the best option as it owns the large and growing mobile enabled population. Moreover, the major incumbent like WeChat as well as other global payment platforms like PayPal have less presence in India.
The Road Ahead For Facebook
As per the industry analysts, initially, Facebook will go with a dollar-based digital currency and start off with peer-to-peer payments, then move towards utilization of its e-wallet as a “Pay with FB” option for any online vendor similarly that of Facebook Login works for identification. Just imagine! What would a Facebook’s stable coin and digital wallet mean for those mobile-only users of the developing countries? It might represent a worldwide mobile commerce structure along with a more stable store of value while compared to their local fiat currency. In this context, at some point in time, Facebook could establish an online bank for the digital natives in these emerging economies.
However, this can’t be achieved overnight! Since to drive adoption of a digital currency, Facebook requires one crucial element that it currently has in short supply: trust. Here arise the chicken and egg dilemma! To rebuild trust, Facebook needs to target more transnational revenue driven by user utility instead of ad sale, however, for that, some users must show trust in Facebook. Under these circumstances, Facebook’s move can be viewed as a safeguard as well as offense simultaneously.
Well, regardless of current circumstances, Facebook deserves some amount of trust as it successfully reinvented itself twice, by turning from a single social media platform in the desktop ear to an unbundled collection of mobile apps. And, becoming a mobile commerce ecosystem along with its own native currency would another feather in its cap! Nevertheless, Facebook will undoubtedly overcome this ultimate challenge as it owns a strong brand image, largest user base, enormous capital, unmatched resources, and of course some very smart people!!!