Mark Zuckerberg’s Facebook is piloting a fee-free money transfer service through its Novi digital wallet that allows users in the US and Guatemala to send money to each other, marking the technology company’s first foray into the multibillion-dollar global remittance market.
The pilot will allow people to send and receive money across borders instantly and securely with no fees, Novi says in a statement on its website.
“We are doing a pilot to test core feature functions and show our operational capabilities in customer care and compliance can serve people well,” it says. “We are also hopeful this will demonstrate a new stablecoin use case as a payments instrument beyond how they are typically used today.”In October, the World Bank said remittances would fall 14 per cent by the end of 2021, compared with pre-coronavirus levels in 2019. The Washington-based lender projected that global remittances would decline 7 per cent to $508 billion in 2020 and 7.5 per cent to $470bn in 2021.
The value of the mobile wallet industry is forecast to grow 24 per cent this year to $2.4 trillion, according to a report by finance and investment company Finaria. The growth trajectory is expected to continue, with the market estimated to reach $3.5tn by 2023, according to the report.
Meanwhile, global cross-border payments are growing at an annual rate of about 5 per cent and are expected to reach $156tn by next year, a report by London-based consultancy Ernst & Young showed.”Facebook already has a rich customer base of more than 2.8 billion users on its social media platform. This approximately equates to more than 30 per cent of the global world population,” says Arun John, chief market analyst with Dubai-based Century Financial.
“By entering this space, the company is likely to give tough competition to other well-established players in the digital space, including PayPal, Visa and even certain remittance-specific cryptocurrencies such as Ripple over the longer term.”
The pilot was first announced on Twitter by David Marcus, the head of Facebook Financial, who oversees the technology company’s payments and financial services products and experiences, which include Facebook Pay, Novi and its cryptocurrency project Diem.
“We have an opportunity to help change the game for so many people who have been left behind by the current financial system. I believe we should take that opportunity and I am eager for us to start the journey,” Mr Marcus said in a series of tweets on Tuesday.
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