Venmo launches a rewards program offering up to 5% back at Target, Sephora, Dunkin’ & Wendy’s

Amid increased competition in the digital payments space, Venmo today announced its first-ever rewards program, Venmo Rewards, which will allow users to earn automatic cash back on purchases when they pay with their Venmo card at select retailers. The company is kicking off the program with limited-time cash back deals, including 5% back at Target, 5% back at Sephora, 4% back at Dunkin’, 5% back and Wendy’s and more.

The cash back earned through the program is deposited directly into your Venmo account, so you can use the funds to pay friends through the Venmo app, make Venmo card purchases, pay merchants that accept Venmo, or you can transfer the money to your linked bank account or debit card.

Users will also be able to track their Rewards in a dedicated section of the Venmo mobile app, where they can see what they’ve earned on each of their eligible purchases. They then can opt to share their rewards earned in the Venmo feed.

Similar to how credit card offers come and go, Venmo Rewards cash back deals will also expire at some point, as new ones arrive to take their place. Venmo cardholders will be able to check in on the current offers available to them at any time by visiting their card settings in the Venmo app.

The launch of a Rewards program comes at a time when Venmo is facing increased competition in the digital payments space. Though originally a peer-to-peer money transfer service, Venmo added a debit card last year that allows users to spend their Venmo balance out in the real world, while still taking advantage of features like splitting bills and the social feed, which helped popularize the service among a younger demographic. Recently, Venmo announced plans to offer a credit card, as well.

Today, users don’t necessarily reach for a Venmo card at point-of-sale, however.

They may prefer to use a card where they’ll get airline miles or a retailer’s store card, where they get a discount on the sale itself and/or loyalty points. Apple’s new credit card is also growing in popularity for those who like a cash back option, as it offers up to 3% back which is then stored directly on your Apple Cash card — the seamless transfer between the two made possible by the deep integration Apple allows for its own products.

In order to keep users participating in the Venmo ecosystem, the company needs to find new ways to encourage the use of its card, too.

Venmo Rewards will begin to roll out starting next week, Venmo says.

Facebook staff demand Zuckerberg limit lies in politcal ads

Submit campaign ads to fact checking, limit microtargeting, cap spending, observe silence periods, or at least warn users. These are the solutions Facebook employees put forward in an open letter pleading with CEO Mark Zuckerberg and company leadership to address misinformation in political ads.

The letter, obtained by the New York Times’ Mike Isaac, insists that “Free speech and paid speech are not the same thing . . . Our current policies on fact checking people in political office, or those running for office, are a threat to what FB stands for.” The letter was posted to Facebook’s internal collaboration forum a few weeks ago.

The sentiments echo what I called for in a TechCrunch opinion piece on October 13th calling on Facebook to ban political ads. Unfettered misinformation in political ads on Facebook lets politicians and their supporters spread inflammatory and inaccurate claims about their views and their rivals while racking up donations to buy more of these ads.

The social network can still offer freedom of expression to political campaigns on their own Facebook Pages while limiting the ability of the richest and most dishonest to pay to make their lies the loudest. We suggested that if Facebook won’t drop political ads, they should be fact checked and/or use an array of generic “vote for me” or “donate here” ad units that don’t allow accusations. We also criticized how microtargeting of communities vulnerable to misinformation and instant donation links make Facebook ads more dangerous than equivalent TV or radio spots.

Mark Zuckerberg Hearing In Congress

The Facebook CEO, Mark Zuckerberg, testified before the House Financial Services Committee on Wednesday October 23, 2019 Washington, D.C. (Photo by Aurora Samperio/NurPhoto via Getty Images)

Over 250 employees of Facebook’s 35,000 staffers have signed the letter, that declares “We strongly object to this policy as it stands. It doesn’t protect voices, but instead allows politicians to weaponize our platform by targeting people who believe that content posted by political figures is trustworthy.” It suggests the current policy undermines Facebook’s election integrity work, confuses users about where misinformation is allowed, and signals Facebook is happy to profit from lies.

The solutions suggested include:

  1. Don’t accept political ads unless they’re subject to third-party fact checks
  2. Use visual design to more strongly differentiate between political ads and organic non-ad posts
  3. Restrict microtargeting for political ads including the use of Custom Audiences since microtargeted hides ads from as much public scrutiny that Facebook claims keeps politicians honest
  4. Observe pre-election silence periods for political ads to limit the impact and scale of misinformation
  5. Limit ad spending per politician or candidate, with spending by them and their supporting political action committees combined
  6. Make it more visually clear to users that political ads aren’t fact-checked

A combination of these approaches could let Facebook stop short of banning political ads without allowing rampant misinformation or having to police individual claims.

Zuckerberg Elections 1

Zuckerberg had stood resolute on the policy despite backlash from the press and lawmakers including Representative Alexandria Ocasio-Cortez (D-NY). She left him tongue-tied during a congressional testimony when she asked exactly what kinds of misinfo were allowed in ads.

But then Friday Facebook blocked an ad designed to test its limits by claiming Republican Lindsey Graham had voted for Ocasio-Cortez’s Green Deal he actually opposes. Facebook told Reuters it will fact-check PAC ads

One sensible approach for politicians’ ads would be for Facebook to ramp up fact-checking, starting with Presidential candidates until it has the resources to scan more. Those fact-checked as false should receive an interstitial warning blocking their content rather than just a “false” label. That could be paired with giving political ads a bigger disclaimer without making them too prominent looking in general and only allowing targeting by state.

Deciding on potential spending limits and silent periods would be more messy. Low limits could even the playing field and broad silent periods especially during voting periods could prevent voter suppression. Perhaps these specifics should be left to Facebook’s upcoming independent Oversight Board that acts as a supreme court for moderation decisions and policies.

fb arbiter of truth

Zuckerberg’s core argument for the policy is that over time, history bends towards more speech, not censorship. But that succumbs to utopic fallacy that assumes technology evenly advantages the honest and dishonest. In reality, sensational misinformation spreads much further and faster than level-headed truth. Microtargeted ads with thousands of variants undercut and overwhelm the democratic apparatus designed to punish liars, while partisan news outlets counter attempts to call them out.

Zuckerberg wants to avoid Facebook becoming the truth police. But as we and employees have put forward, there a progressive approaches to limiting misinformation if he’s willing to step back from his philosophical orthodoxy.

The full text of the letter from Facebook employees to leadership about political ads can be found below, via the New York Times:

We are proud to work here.

Facebook stands for people expressing their voice. Creating a place where we can debate, share different opinions, and express our views is what makes our app and technologies meaningful for people all over the world.

We are proud to work for a place that enables that expression, and we believe it is imperative to evolve as societies change. As Chris Cox said, “We know the effects of social media are not neutral, and its history has not yet been written.”

This is our company.

We’re reaching out to you, the leaders of this company, because we’re worried we’re on track to undo the great strides our product teams have made in integrity over the last two years. We work here because we care, because we know that even our smallest choices impact communities at an astounding scale. We want to raise our concerns before it’s too late.

Free speech and paid speech are not the same thing.

Misinformation affects us all. Our current policies on fact checking people in political office, or those running for office, are a threat to what FB stands for. We strongly object to this policy as it stands. It doesn’t protect voices, but instead allows politicians to weaponize our platform by targeting people who believe that content posted by political figures is trustworthy.

Allowing paid civic misinformation to run on the platform in its current state has the potential to:

— Increase distrust in our platform by allowing similar paid and organic content to sit side-by-side — some with third-party fact-checking and some without. Additionally, it communicates that we are OK profiting from deliberate misinformation campaigns by those in or seeking positions of power.

— Undo integrity product work. Currently, integrity teams are working hard to give users more context on the content they see, demote violating content, and more. For the Election 2020 Lockdown, these teams made hard choices on what to support and what not to support, and this policy will undo much of that work by undermining trust in the platform. And after the 2020 Lockdown, this policy has the potential to continue to cause harm in coming elections around the world.

Proposals for improvement

Our goal is to bring awareness to our leadership that a large part of the employee body does not agree with this policy. We want to work with our leadership to develop better solutions that both protect our business and the people who use our products. We know this work is nuanced, but there are many things we can do short of eliminating political ads altogether.

These suggestions are all focused on ad-related content, not organic.

1. Hold political ads to the same standard as other ads.

a. Misinformation shared by political advertisers has an outsized detrimental impact on our community. We should not accept money for political ads without applying the standards that our other ads have to follow.

2. Stronger visual design treatment for political ads.

a. People have trouble distinguishing political ads from organic posts. We should apply a stronger design treatment to political ads that makes it easier for people to establish context.

3. Restrict targeting for political ads.

a. Currently, politicians and political campaigns can use our advanced targeting tools, such as Custom Audiences. It is common for political advertisers to upload voter rolls (which are publicly available in order to reach voters) and then use behavioral tracking tools (such as the FB pixel) and ad engagement to refine ads further. The risk with allowing this is that it’s hard for people in the electorate to participate in the “public scrutiny” that we’re saying comes along with political speech. These ads are often so micro-targeted that the conversations on our platforms are much more siloed than on other platforms. Currently we restrict targeting for housing and education and credit verticals due to a history of discrimination. We should extend similar restrictions to political advertising.

4. Broader observance of the election silence periods

a. Observe election silence in compliance with local laws and regulations. Explore a self-imposed election silence for all elections around the world to act in good faith and as good citizens.

5. Spend caps for individual politicians, regardless of source

a. FB has stated that one of the benefits of running political ads is to help more voices get heard. However, high-profile politicians can out-spend new voices and drown out the competition. To solve for this, if you have a PAC and a politician both running ads, there would be a limit that would apply to both together, rather than to each advertiser individually.

6. Clearer policies for political ads

a. If FB does not change the policies for political ads, we need to update the way they are displayed. For consumers and advertisers, it’s not immediately clear that political ads are exempt from the fact-checking that other ads go through. It should be easily understood by anyone that our advertising policies about misinformation don’t apply to original political content or ads, especially since political misinformation is more destructive than other types of misinformation.

Therefore, the section of the policies should be moved from “prohibited content” (which is not allowed at all) to “restricted content” (which is allowed with restrictions).

We want to have this conversation in an open dialog because we want to see actual change.

We are proud of the work that the integrity teams have done, and we don’t want to see that undermined by policy. Over the coming months, we’ll continue this conversation, and we look forward to working towards solutions together.

This is still our company.

PayPal reports solid third-quarter results, with total payment volume growing 25%

PayPal reported third-quarter results today that were slightly ahead of analysts’ expectations, driven by an increase in total payment volume.

The company’s quarterly revenue grew 19% year-over-year to $4.38 billion. Its GAAP net income was 39 cents per share, or $462 million, a 7% year-over-year increase. On a non-GAAP basis, net income was 61 cents a share, a 5% increase.

These figures included a negative impact from strategic investments in MercadoLibre and Uber; without that, GAAP net income would have increased 48% to 54 cents per share, and non-GAAP net income would have rose 31% to 76 cents per share.

During the third quarter, PayPal added 9.8 million active accounts, increasing the total number by 16% to 295 million. Total payment volume (TPV) increased 25% to $179 billion. Venmo processed more than $27 billion in TPV during the quarter, an increase of 64%.

For its full-year results, PayPal said it expects earnings per share ranging from $3.06 to $3.08 per share, on revenue of $17.7 billion to $17.76 billion.

In September, PayPal announced it will acquire a 70% equity interest in GoPay (Guofubao). The deal is expected to close during the fourth quarter and will make PayPal the first foreign payments company licensed to provide online payment services in China, an important potential driver of future growth.

Where are US fintech’s next billion-dollar startups?

As fintech investments soar to new heights, investors are looking at the bottom and top levels of the services stack to find the next billion-dollar startups.

That’s the word from seasoned investors like Andreessen Horowitz’s managing director, Angela Strange, who has invested in a number of successful financial services technology companies. For Strange and Chris Britt, co-founder and chief executive of financial services startup Chime Bank, the best opportunities are in customer-facing financial services and specific infrastructure opportunities that can support those  businesses.

For many large companies, financial services are already entering a twilight period. Markets like consumer and student lending, banking and financial management and business lending are becoming more crowded, and companies like Affirm, Betterment, Brex, Chime Bank, CommonBond, Kabbage, Robinhood, SoFi, Wealthfront and many others have raised hundreds of millions so they can take on established players in banking and finance.

Investments into financial technology companies in the U.S. exploded in 2019 with at least $12.7 billion flowing in the first half of the year alone. That figure — a 60% jump in dollars committed — came even as the number of deals remained relatively steady, according to data from Accenture.

Increasing capital commitments were even more pronounced in Europe and the United Kingdom, where a fintech boom has nearly doubled the amount of money committed to startups over the first half of 2019 from a year-ago period.

Venmo to launch its first credit card in 2020

Venmo announced today its plans to launch its first-ever credit card. The card is being issued partnership with Synchrony, already the issuer behind Venmo parent company PayPal’s Extras Mastercard and Cashback Mastercard, in an expanded relationship. The move is meant to help Venmo, a still unprofitable arm of PayPal’s larger business, generate more revenue.

PayPal’s plans in this space were reported in April of this year by The WSJ, which said the company had been taking meetings with various banks since late 2018 to discuss a Venmo-branded credit card. The report said PayPal was then close to selecting Synchrony as its issuer and would likley announce the card sometime later in 2019, as it now has.

Synchrony is known for powering a number of store cards, including those from Amazon, eBay, JCPenney, TJX, Stein Mart, American Eagle, Gap, Old Navy, Rooms to Go, Lowe’s, and many others — around 100 cards, in total. The company says it has financed over $140 billion in sales and has 80.3 million active accounts.

While this is Venmo’s first credit card, it’s not its first physical card.

The company also offers a Mastercard-branded debit card, launched in July 2018, which lets users tap into their Venmo account balance out in the real world, where you can’t pay digitally.

This launch allowed Venmo to generate revenue from interchange fees, in addition to its investments made with customer balances, as is typical in this space.

Venmo had also looked to better monetize its sizable user base of 40 million+ with other small fees — like the 1% fee to move Venmo balances instantly to a user’s bank account, for example. But Venmo has yet to turn a profit, despite its widespread adoption.

Once the new card is available, Venmo credit cardholders will be able to both apply for the card in the Venmo app and then manage their account from there, if approved. They’ll also receive real-time alerts, and will be able to split purchases using the card.

“For 15 years, Synchrony has been a strategic partner in offering credit cards that enable greater purchasing power and rewards for PayPal consumers,” said Dan Schulman, CEO, PayPal, in a statement. “We are pleased to deepen our relationship with Synchrony to bring groundbreaking new credit experiences to the Venmo community through a desirable credit card and a seamless in-app experience,” he said.

The launch follows the much-anticipated launch of Apple Card as well as a larger shift in how younger consumers are using payment cards and banking services. They’re often opting to forgo traditional brick-and-mortar banks to instead use modern banking apps, where the focus is on providing mobile-friendly tools and reduced fees.

If Venmo further moves into this space, it will have competition from the likes of Varo, Simple, Chime, Current, Cleo, N26, Step, Stash, and others.

The new co-branded credit card will be launched to U.S. Venmo users in the second half of 2020, the company says. More details about the card, including other perks it may offer, will be available later on.

PayPal is set to announce its Q3 2019 earnings on Oct. 23. Wall St. is expecting it will announce growth, with EPS of $0.69, a year-over-year change of +19%.

Popular app Snaptube caught serving invisible ads and charging users for premium purchases they haven’t made

A popular video downloader app for Android has been found generating fake ad clicks and unauthorized premium purchases from its users, according to a security firm.

Snaptube, which boasts some 40 million users, allows users to download videos and music from YouTube, Facebook, and other major video sites. The app, developed in China, is not on Google Play because the app maker claims Google will not allow video downloader apps on the store. Some third-party app stores estimate Snaptube has been downloaded over a billion times to date. The app’s developer says that the app is “safe” to use.

But researchers at London-based security firm Upstream, which shared its findings exclusively with TechCrunch, said the free app ends up costing consumers.

Upstream’s chief executive Guy Krief said users are served invisible ads without their knowledge that run silently on the device, allowing the app maker to generate ad revenue at the expense of churning up a user’s mobile data and battery power. The app also uses the same background click technique to rack up premium purchases charges that the user never asked for.

Krief said the only indication that a user’s device might be used in this way is if their mobile data usage increases, their device gets warm, and the battery runs out faster than usual.

The company pinned the blame on a third-party software development kit (SDK) code, known as Mango, embedded inside Snaptube’s app. Mango was also used in Vidmate, a similar video downloader app also accused of ad fraud behavior; as well as 4shared, a cloud storage app.

According to Uptream, this third-party code kit downloads additional components from a central server in order to engage in this fraudulent ad activity, and uses chains of redirection and obfuscation to hide its activity.

Mango is particularly sneaky, said Krief. Within hours of the news breaking that Vidmate’s app was engaged in similar suspicious behavior, his company saw a Snaptube’s suspicious activity drop almost immediately. “Our assumption back then was they’re probably also using similar code and they went silent because of all the publicity,” he said in a phone call.

Two months later, the same suspicious activity in Snaptube’s app resumed.

A graph showing Snaptube’s suspicious activity dropping as soon as the Vidmate story is published. (Image: Upstream)

Krief said it was “very common” to see apps engaging in ad fraud to go through bursts of high levels of activity, followed by periods of quiet.

In recent weeks Upstream said it’s blocked more than 70 million suspicious transactions originating from four million devices, according to data from its proprietary security platform. The company said consumers could have been charged tens of millions of dollars in unwanted premium charges had those clicks not been blocked.

Snaptube said in a statement: “We didn’t realize the Mango SDK was exercising advertising fraud activities, which brought us major loss in brand reputation.”

“After the user complained about the malicious behavior of the Mango SDK, we quickly responded and terminated all cooperations with them,” a spokesperson said. “The versions on our official site as well as our maintained distribution channels are free of this issue already.”

Snaptube said it was “considering” legal action against the Mango developers.

It’s not the first time Snaptube has been caught out engaging in potentially fraudulent activity. In February, security firm Sophos found the app engaging in similar fraudulent behavior — generating and reporting fake ad clicks and racking up costs for the user. Later in the year, Snaptube responded to reports that Android devices were warning users that the app contained the suspicious third-party code, noting that it would “terminate” using the code “as soon as possible.”

That promise was made in August. Yet, some three months later, the code remains in the app.

Amazon Pay users in India can now pay their utility, mobile and cable bills with Alexa

Amazon Pay users in India can now use voice command with Alexa to pay their utility, internet, mobile, and satellite cable TV bills, the e-commerce giant said on Wednesday. This is the first time, the company said, it is pairing these functionalities with Amazon Pay in any market.

The e-commerce giant, which competes with Walmart’s Flipkart in India, said any Alexa-enabled device such as the Echo Dot smart speaker, the Fire TV Stick dongle, or headphones from third-party vendors will support the aforementioned feature in India.

To be sure, Amazon has long allowed users in many markets to purchase items using voice command with Alexa. But this is the first time the American company is letting users pay their electricity, water, cooking gas, broadband, and satellite TV bills with voice and Amazon Pay.

Amazon Pay is available in many markets, but the service has become especially popular in India, where the concept of parking money to a digital wallet skyrocketed in usage in late 2016 after the Indian government invalidated much of the paper bills in circulation in the country.

Without disclosing specific figures, Amazon said “3X more customers” compared to last year’s event used Amazon Pay service to pay during the recent six-day festive sales. It said a quarter of all digital transactions during the event was carried out on its Pay service.

To boost Amazon Pay engagements in India, the company has offered lofty cashback on Pay on a number of purchases over the years. Users can also enjoy hefty discount if they use Amazon Pay to pay for their food, tickets, and other things on select popular third-party services.

During the holiday season, the company said, “customers booked flight tickets worth 300 trips around the earth.”

Amazon Pay makes it much more convenient for users to pay their digital purchases especially those that are recurring in nature, said Puneesh Kumar, country manager of Alexa Experiences and Devices.

The company says users can engage with Pay through voice commands like “Alexa, what’s my balance,” which will reveal the amount they have available for purchase in their Amazon Pay wallet. Users can also initiate the process of topping money to their mobile wallet using a voice command. They can say something like, “Alexa, add Rs 1000 to my Amazon Pay balance,” which will send a link as a text on their phones to complete the transaction.

True Balance raises $23M to bring its payments app to more small cities and towns in India

South Korean startup True Balance, which operates an eponymous financial services app aimed at tens of millions of users in small cities and towns in India, has closed a new financing round as it looks to court more first time users in the world’s second largest internet market.

True Balance said on Tuesday that it has raised $23 million in its Series C financing round from seven Korean investors — NH Investment & Securities, IBK Capital, D3 Jubilee Partners, SB Partners, Shinhan Capital, and existing partners IMM Investment, and HB Investment.

TechCrunch reported earlier this year that True Balance — which has raised $65 million to date including the $38 million that it closed in its previous financing round — was looking to raise as much as $70 million for this financing round.

True Balance began its life as a tool to help users easily find their mobile balance, or top up pre-pay mobile credit. But in its four-year journey, its ambition has significantly grown beyond that. Today, it serves as a digital wallet app that helps users pay their mobile and electricity bills, and offer credit to customers so that they can pay later for their digital purchases.

true balance

The startup says it has amassed over 60 million registered users in India, most of whom live in small cities and towns — or dubbed India 2 and India 3. Most of these users are coming online for the first time and True Balance says it has an army of local agents — who get certain incentives — to help first time internet users understand the benefit of online transactions and start using the app.

True Balance says it clocks more than 300,000 digital transactions on its app each day. The startup, which recently introduced e-commerce shopping service on its app to sell products like smartphones, has clocked $100 million in GMV sales in the country to date.

Charlie Lee, founder of True Balance, said the startup will use the fresh capital to bulk up the offerings on the app. Some of the features that True Balance intends to add before the end of this fiscal year include the ability to purchase bus and train tickets, digital gold, and book cooking gas cylinders.

True Balance will also expand its lending and e-commerce services, Lee said. Its lending feature was used 1 million times in three months when it was introduced earlier this year. “We aim to strengthen our data and alternative credit scoring strategy to provide better financial services to our target — the next billion Indian users. Our goal is to reach 100 million digital touch points and become one of the top fin-tech companies in India by 2022,” he added in a statement.

Even as more than 600 million users in India are online today, just about as many remain offline. In recent years, many major companies in India have started to customize their services to appeal to users in India 2 and India 3 — who also have limited financial power.

Libra claims 180 potential replacements for 7 mutineers

Attempting to signal its popularity despite high-profile defections from Visa, Stripe, and more, the Facebook-led cryptocurrency Libra Assocation announced that 1,500 organizations have expressed interest in joining the Libra project. 180 of those meet eligibility requirements to become members, which could replace the 7 companies that dropped out of the Association this month.

This new crop of potential recruits could help the Libra Association reach its 100-member goal ahead of a scheduled 2020 launch that looks likely to be delayed by intense regulator pushback.

The announcement came out of the first official meeting of the Libra Association today in Geneva, Switzerland. The group appointed its board of directors: Facebook’s head of its cryptocurrency Calibra team David Marcus, Andreessen Horowitz’s Katie Haun, Xapo’s Wences Cesares, Kiva Microsystems’ Matthew Davie, and PayU’s Patrick Ellis. Marcus’ inclusion should be no surprise given he’s been the public face of Libra, even though his former company PayPal pulled out of the Association.

Another former PayPal’er Bertrand Perez was formally named the Libra Association’s COO and Interim Managing Director after unofficially holding these titles. The former senior director of payments engineering at PayPal is now also the chairperson of Libra’s five-member board and full-membership council. “We have no vocation to play the pirates” he told news outlet Revyuh last month, noting “if, for example, the European Central Bank still refuses us the right to operate in Europe, we will not do it, we do not intend to play the pirates, we respect the legislation.”

Libra’s head of communications and policy Dante Disparte formerly of Risk Cooperative and head of business development Kurt Hemecker formerly of Zong had their roles confirmed too.

The remaining Libra Association members listed below signed the Libra charter. They’ve agreed that members can leave for any reason, and with some restrictions transfer their membership plus $10 million in Libra Investment Tokens stake to another eligible organization.

  • Payments: PayU (Naspers’ fintech arm)
  • Technology and marketplaces: Facebook/Calibra, Farfetch, Lyft, Spotify AB, Uber Technologies, Inc.
  • Telecommunications: Iliad, Vodafone Group
  • Blockchain: Anchorage, Bison Trails, Coinbase, Inc., Xapo Holdings Limited
  • Venture Capital: Andreessen Horowitz, Breakthrough Initiatives, Ribbit Capital, Thrive Capital, Union Square Ventures
  • Nonprofit and multilateral organizations, and academic institutions: Creative Destruction Lab, Kiva, Mercy Corps, Women’s World Banking
  • No Longer Members: Visa, Mastercard, PayPal, Stripe, Booking Holdings, eBay, Mercado Pago

Libra Association 21 Members

The Libra Association did not announce any changes in strategy or other plans that could help the organization assuage regulators’ fears. One path suggested by Libra Association member Andreessen Horowitz’s partner Chris Dixon was to move to Libra being denominated in U.S. dollars rather than being pegged to a basket of international currencies. That might quiet concerns about Libra potentially competing directly with the US dollar.

This leaves the reveal of the 180 potential members as the biggest news from the meeting. A Libra Association spokeperson writes:

“Since the Libra project was announced on June 18th, 2019, it has generated excitement around the world. the Libra Association confriemd that over 1,500 entities have indicated interest in joining the Libra project effort, and approximately 180 entities have met the preliminary membership criteria shared at Libra.org.”

Those requirements include businesses hitting two of three thresholds of a $1 billion USD market value or $500 million in customer balances, reaching 20 million people a year, or being recognized as a top 100 industry leader. There are other criteria for cryptocurrencies businesses, non-profits, and universities.

Bertrand Perez

The Libra Association chairperson, COO, and interim managing director Bertrand Perez

However, we don’t have information on when the interest of those 1500 potential partners was tallied. The withdrawl of Mastercard, PayPal, and more, comments from regulators intent on blocking the currency, and Marcus’ tense questioning on Capitol Hill could have since scared off some would-be allies.

Marcus and Perez face an uphill battle to get Libra to market. Not only do they have to prove it’s safeguarded against fraud, moneylaundering, and hurting sovereign currencies. They also must tangle with the toxic brand Facebook has developed over the years. Legislators who feel like the social network is too big are seizing on their second chance to constrain it with Libra.

Why each Libra member’s mutiny hurts Facebook

There’s a strategic cost to the defection of Visa, Stripe, eBay, and more from the Facebook -led cryptocurrency Libra Association . They’re not just names dropping off a list. Each potentially made Libra more useful, ubiquitous, or reputable. Now they could become obstacles to the token’s launch or growth.

Fearing regulators’ inquiries not just into their Libra involvement but the rest of their businesses, these companies are pulling out at least for now. None had made precise commitments to integrating Libra into their products, and they’ve said they could still get involved later. But their exit clouds the project’s future and leaves Facebook to absorb more of the blowback.

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Here’s what each of the departing Libra Association members brought to the table and how they could spawn new challenges for the cryptocurrency:

Visa

With one of most widely-accepted payment methods, Visa could have helped make Libra universally spendable. It’s also one of the most prestigious names in finance, lending deep credibility to the project. Visa’s departure leaves Libra looking more like tech companies barging into payments, conjuring fears of their move fast, break things approach that could cause financial ruin if Libra runs into problems. It also could leave Libra with a much weaker presence in brick-and-mortar shops. No one will want to own a cryptocurrency that doesn’t appreciate in value and can’t be easily spent.

MasterCard

The involvement of MasterCard alongside Visa made Libra look like the incumbents adapting to modern technologies. This made it less threatening, and gave cryptocurrency an air of inevitability. MasterCard would have also brought an even wider network of locations where Libra could one day be used for payment. Now MasterCard and Visa might actively work against Libra to prevent their payment methods being made obsolete by Libra and its elimination of transaction fees through the blockchain. Two of Libras biggest allies could become its biggest foes.

PayPal

Facebook has repeatedly told regulators that its Calibra app plus integrations into Messenger and WhatsApp would not be the only Libra wallets, pointing to PayPal . Facebook’s head of Libra David Marcus told Congress when asked about the social network’s outsized power to exploit Libra through its own Calibra wallet that “you have companies like PayPal and others that will, of course, collaborate, but [also] compete with us”. Now Facebook won’t have a scaled payment method it doesn’t own to point to as a likely alternative for people who don’t want to trust Facebook’s Calibra, Messenger, or WhatsApp to be their Libra wallet. The Libra Association also loses PayPal’s enormous network of online merchants that accept it, plus the inroad to integration into its peer-to-peer payback app Venmo. PayPal convinced the mainstream public to trust online payments — the exact kind of trust Facebook desperately needs. The fact that Marcus was also the former president of PayPal but couldn’t keep it in the association raises concerns about the group’s coalition-building prowess.

Stripe

Stripe’s enormous popularity with ecommerce vendors made it a valuable Libra Association member. Together with PayPal, Stripe facilitates a huge portion of online transactions outside of China. Its ease of integration made it a top pick for developers Facebook surely hoped would build atop Libra. Stripe’s exit destroys a critical bridge to the fintech startup ecosystem that could have helped institutionalize Libra. Now the association will have to work on engineering payment widgets from scratch without Stripe’s assistance, which could slow adoption if it ever launches.

There’s a clear reason all these payment processors bailed. Senators Brian Schatz (D-HI) and Sherrod Brown (D-OH) wrote a letter to Visa, MasterCard, and Stripe’s CEOs this week explaining that “If you take this on, you can expect a high level of scrutiny from regulators not only on Libra-related activities, but on all payment activities.”

eBay

As one of the longest standing ecommerce companies, eBay bolstered beliefs that Libra could be used to power transactions between untrusted strangers without a costly middleman. It might have also put Libra into practice on one of the top western online marketplaces outside of Amazon. Without destinations like eBay onboard, average netizens will have fewer opportunities to be exposed to Libra’s potential to eliminate transaction fees.

Mercado Pago

One of the lesser-known Libra Association members, Mercado Pago helps merchants receive payments via email or in installments. The idea of connecting financially underserved populations has been core to Facebook’s pitch for why Libra should exist. The Libra Association has been light on the details of how exactly it serves this demographic, relying on the inclusion of partners like Mercado Pago to help it figure this out later. Mercado Pago’s departure leaves Libra looking more like a financial power grab rather than a tool to assist the disadvantaged.

Who’s Left?

On Monday, the remaining Libra Association members will meet to finalize the initial member list, elect a board, and create a charter to govern the project. This forced the hands of the companies above, who had their last chance to depart this week before being pulled deeper into Libra.

Facebook Currency Hearing

UNITED STATES – JULY 16: David Marcus, head of Facebook’s Calibra digital wallet service, prepares to testify during the Senate Banking, Housing and Urban Affairs Committee hearing on “Examining Facebook’s Proposed Digital Currency and Data Privacy Considerations” on Tuesday, July 16, 2019. (Photo By Bill Clark/CQ Roll Call)

Who’s left includes venture capital firms, ride sharing companies, non-profits, and cryptocurrency companies. They are less tied up with the status quo of payment processing, and therefore had less to lose. The blockchain-specific companies were likely hoping to piggyback on financial giants like Visa to get Libra approved and create more legitimacy for their industry as a whole.

These partners could help fund an ecosystem of Libra developers, create daily use cases, spread the system in the developing world, and push for alliances between Libra and cryptocurrency players. Facebook will need to fight to keep them aboard if it wants to avoid Libra looking like a unilateral disruption of the economy.

For Libra to actually launch, Facebook needs to make serious concessions and divert from its initial vision. Otherwise if it continues to butt heads with regulators, more members could flee. One option floated by Libra Association member Andreessen Horowitz’s a16z Crypto partner Chris Dixon was for Libra to be denominated in US dollars instead of a basket of international currencies. That might lessen fears that Libra intends to compete directly with the dollar.

It’s become apparent that Facebook will not get its ideal cryptocurrency out the door. This is the brand tax of 100 scandals coming back to bite it. Now the best it can hope for is to get even a watered-down version launched, prove it can actually help the underbanked, and then hope to convince regulators it’s well-intentioned.