According to reports, Facebook is working on a money transfer application in cryptocurrency that will be integrated into WhatsApp. The service, which should be launched in India after approval, will apparently be addressed to the remittance market.
Second BloombergWhatsApp is developing a stablecoin for the project and its value will be locked to that of the US dollar. A stablecoin will be able to overcome the huge price fluctuations that affect the value of digital currencies such as Bitcoin, whose rates may vary by more than 10% within 48 hours.
For some time, Facebook has been conducting research on blockchain and digital coins. In May, he put together a research unit led by former PayPal president David Marcus. He is currently also vice president of the messaging products of the company. The group currently has about 40 researchers. Marcus is believed to have played a key role in the company's last crypto venture.
The Facebook executive has already talked about the prospect of bringing cryptocurrency payments to Facebook Messenger and has pointed out some drawbacks. In his view, high transaction fees and slow processing times would certainly hinder the widespread adaptation of this function. He was, however, optimistic that the cryptocurrency community would eventually come up with solutions that would make it possible to integrate a cryptocurrency.
It is said that Facebook is hiring to build its crypto-blockchain research and development team, which is currently made up of former executives from PayPal and Instagram. Some Facebook employees have also been recruited, including Geoff Teehan, who is responsible for Product Design and Morgan Beller, a member of the company's business development team.
Why Crypto payments in India?
India is at the top of the list of countries with the largest volume of money remittances from abroad. The data for 2017 amount to approximately $ 69 million, according to a recent World Bank report. This was a 9.9 percent increase over the previous year. Global global remittance figures reached $ 613 billion in 2017.
It is thought that Facebook is targeting this market with its cryptographic application WhatsApp. India currently has over 200 million users of WhatsApp. The application also has a market penetration of around 28 percent, according to Statist data.
WhatsApp pushed for an approval of the payment service
Recently, WhatsApp CEO Chris Daniels sent a letter to the Reserve Bank of India asking to extend payment services to its users in the country.
The letter, dated November 5, required the approval of a UPI BHIM (Unified Payments Interface). Reportedly, the company will work with the National Payments Corporation of India (NPCI) to meet regulatory requirements and has already started implementing the RBI recommendations. They include data storage requirements that require the company to provide information on unlimited access to payments to the RBI. The proposal is still awaiting approval.
In February, WhatsApp started testing its payment platform in India. The project was undertaken in collaboration with ICICI Bank. Approximately 700,000 users took part in the program. The launch was postponed after the Cambridge Analytica scandal exploded. This led to serious privacy issues that led the Reserve Bank of India to issue a new directive aimed at archiving data and access requirements that forced the company to restructure the project.
The approval of the cryptosystem by the Indian government would make WhatsApp a leading funds transfer platform in the country.
The impact on the remittance market in India
A cryptocurrency remission function is likely to lead to lower transaction costs and faster processing than conventional money transfer methods. The normal money transfer platforms count the transaction fees that can reach and exceed 5% of the total amount processed. Making cross-border payments can attract a currency conversion fee.
In many cases, the process can take several days before the funds reach the recipient. On the other hand, cryptocurrency transaction fees are usually extremely low. For example, TRON transactions involve only a commission of about $ 0.0000901, while Monero transactions cost about $ 0.01. This is according to the data obtained by Bitinfo Charts.
Tether, which is the most popular stablecoin in terms of trade volume, does not charge any transfer fees but applies withdrawal charges.
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