After the exit of Visa, eBay, and other major firms from Facebook Libra, Libra scored a rare victory when Shopify announced it was joining the Libra Association. The Shopify platform will join the association and make a $10 million contribution. It will also be given a node to operate, which will be responsible for processing transactions that take place using the Libra coin.
If Facebook manages to convince regulators about the project, it could be a major boost for Shopify. With Libra coins, Shopify will be able to avoid paying processing fees to credit card companies and other payment processors. The Libra coins are designed to move between wallets with almost no fees. It could help Shopify’s over one million merchants save a lot of money.
Shopify said that it decided to join Facebook Libra to help its merchants cut costs as well as help its merchants expand into the developing world. The company said that the existing financial system was not designed to handle the scale of internet commerce.
What the Deal Entails
As part of the deal, Shopify is going to become a validator node. It will also gain one vote on the association’s council. The company will also be able to earn divided from the interest earned on the Libra’s basket of reserve currencies. This interest will be earned in proportion to its $10 million investment.
The Libra Association had lost almost all of its e-commerce partners after a number of them decided to back out of the association due to regulatory pressure. This loss included Visa and Mastercard as well as online payment platforms such as PayPal and Stripe. Additionally, eBay decided to back out of the deal. This led to fears that the Libra association would not have the support needed to make the Libra coin useful to the masses.
As it works to get regulators onboard, Facebook has been looking into options such as Facebook Pay and WhatsApp pay. These options will rely on the traditional methods of finance such as credit cards and bank transfers.
The CEO of Shopify recently tweeted that the company spends a lot of effort trying to find solutions for eCommerce in parts of the world where the banking sector leaves a lot to be desired.