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Visa, Mastercard shun Facebook’s Libra digital currency plan

Payment giants Visa and Mastercard drop out of Facebook's digital currency project Libra, a difficult blow to Libra

By KEN SWEET, Associated Press
Published: October 11, 2019, 4:37pm

NEW YORK — Visa and Mastercard on Friday announced their departure from Facebook’s Libra project, a major setback to the social network’s plan for a worldwide digital currency.

Along with the two payment giants, several other large companies have said they’re exiting Libra. Payment processing company Stripe is stepping back, as well as e-commerce company eBay.

PayPal was the first of Libra’s big partners to leave, announcing last week it would no longer be involved.

Facebook has faced substantial criticism since the summer when it unveiled plans to create a separate, private currency system to allow users to make cross-border payments more easily. The Libra Association, based in Switzerland, was supposed to give the currency project a comfortable arm’s length distance from Facebook, which wouldn’t own Libra.

Despite those efforts, financial regulators, as well as members of Congress on both sides of the political divide, noted the privacy issues raised with the social networking company controlling a currency, while also expressing concern about how Libra could be used for money laundering like Bitcoin or Ether, other digital currencies. Even President Donald Trump weighed in, tweeting that Facebook should be subject to U.S. banking laws if the Libra project were to move forward.

All five departures come less than a week before the Libra Association’s official signing ceremony, which is to be held in Switzerland.

The impact of Libra’s loss of Visa and Mastercard cannot be understated. The two hold an effective duopoly over credit and debit cards in the U.S. and Europe, and are making substantial inroads into developing countries’ payment systems. Their initial agreement to join the Libra Association instantly gave Facebook’s project legitimacy.

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