Facebook Inc. FB -0.17% is recruiting dozens of financial firms and online merchants to help launch a cryptocurrency-based payments system on the back of its gigantic social network. The effort, should it succeed, threatens to upend the traditional, lucrative plumbing of e-commerce and would likely be the most mainstream application yet of cryptocurrency. It comes as the social-media giant is under intense pressure from regulators, users and shareholders to address privacy shortcomings. At the heart of the initiative, under way for more than a year and code-named Project Libra, is a digital coin that its users could send to each other and use to make purchases both on Facebook and across the internet, according to people familiar with the matter. Facebook’s secretive plans for a new payments system involve both investments from traditional financial firms and the potential for users to be rewarded for their activity on the platform. Hurdles to the project are high. Cryptocurrencies have so far failed to catch on in payments. The existing system is full of entrenched interests and technology clogs. And Facebook’s battered standing with users, investors and regulators make it a delicate time to plow into new territory. Working in its favor: One-third of the world’s people log on monthly to Facebook, and they all need to buy things. A spokeswoman for Facebook’s blockchain efforts declined to comment, referring to a previous statement that it “is exploring many different applications.” Seeking total investments of about $1 billion, Facebook has talked to financial institutions including Visa Inc., Mastercard Inc. and payment processor First Data Corp. , the people said. The money would underpin the value of the coin to protect it from the wild price swings seen in bitcoin and other cryptocurrencies, they said. Facebook is also talking to e-commerce companies and apps about accepting the coin, and would seek smaller financial investments from those partners, one of the people said. SHARE YOUR THOUGHTS Would you shop on Facebook using a digital coin? Join the conversation below. Bloomberg News reported in December that Facebook was working on a digital coin that users of its WhatsApp messaging service could use to transfer money, with a focus on overseas remittances. The New York Times reported in February that the company was seeking to raise as much as $1 billion for the project. Facebook is following rivals including Apple Inc. and Amazon.com Inc. into the financial lives of its users. Each has explored or launched major financial products in the past year, joining with traditional financial firms to manage the logistics and regulatory burdens. Facebook aims to burrow more deeply into the lives of its users. It is building a type of checkout option that consumers could use on other websites, some of the people said. Similar to how a Facebook profile can be used to log into hundreds of websites (including The Wall Street Journal), Facebook envisions allowing those credentials to be selected as a payment method when users buy goods online. In an original WSJ documentary, markets reporter Steven Russolillo ventures to Japan and Hong Kong to explore the universe of cryptocurrencies. His mission: create WSJCoin, a virtual token for the newspaper industry. Image: Crystal Tai. Video: Clément Bürge One idea under discussion is Facebook paying users fractions of a coin when they view ads, interact with other content or shop on its platform—not unlike loyalty points accrued at retailers, some of the people said. This would reward the kind of genuine interaction that Facebook, beset by bots and hate speech, has been trying to encourage. It could also blunt criticism that the company makes billions of dollars on the backs of its users, sometimes in troubling or invasive ways. Creating a so-called stablecoin backed by government currency better positions it as a legitimate payment method rather than a speculative bet. The volatility of bitcoin and other cryptocurrencies that aren’t backed by hard assets has hampered their usefulness in payments. Facebook has for years tried to crack into the payments markets, with discussions dating back to the run-up to its 2012 initial public offering. In 2014 it hired PayPal Holdings Inc. President David Marcus and has been adding engineers and products heads steeped in payments and blockchain in recent years. Now Facebook must bend a variety of stakeholders to its vision. Most immediately are Visa and Mastercard Inc., whose networks handle the vast majority of credit and debit card payments in the U.S. If it succeeds, the project threatens the card networks’ dominance over global payments. Facebook comes armed with more than 1.5 billion daily users, many of them in developing countries where social-media sites provide the backbone of internet commerce. The pitch to merchants is a break on fees, one of the people said. Facebook envisions eliminating swipe and other card processing fees that merchants pay on transactions, which are typically around 2% to 3% and are collected by banks, payments processors and networks such as Visa. It is also working to tie online purchases more closely to ads. One idea being considered is that users could click ads to buy a product and pay with Facebook tokens, which the retailer could then recycle to pay for more ads, one person said. Facebook rolled out a similar feature—using dollars and traditional card payments—on Instagram, which it owns, in March. Write to AnnaMaria Andriotis at annamaria.andriotis@wsj.com, Liz Hoffman at liz.hoffman@wsj.com and Peter Rudegeair at Peter.Rudegeair@wsj.com<doc-sep>Social media giant Facebook is seeking investments worth $1 billion for its rumored cryptocurrency stablecoin, the Wall Street Journal (WSJ) reported on May 3. Citing people familiar with the plans, the publication revealed Facebook was currently talking to major payment networks Visa and MasterCard about potential support, along with payment processor First Data Corp. The cryptocurrency project, dubbed “FB Coin,” has fuelled rumors for around a year that Facebook wants to provide in-house payments to users. As more information trickles down to the outside, it appears various options are under consideration by executives, including payments via a user’s Facebook profile. “Facebook is also talking to e-commerce companies and apps about accepting the coin, and would seek smaller financial investments from those partners, one of the people said,” the WSJ added. As Cointelegraph reported, interest in a fiat-centric FB Coin has already reportedly come from within cryptocurrency circles, specifically in the form of VC investment mogul Tim Draper. Last month, plans surfaced that Draper, who is a well-known bitcoin (BTC) bull and supporter of altcoin Tezos (XTZ), would meet with Facebook to discuss investment options. According to the WSJ sources, however, the huge fiat backing is further deliberately designed to remove perceived doubts about FB Coin versus bitcoin and other cryptocurrencies. Volatility, they said, should be avoided in order to boost uptake.<doc-sep>
REUTERS/Charles Platiau/File Photo Facebook is working on a secret initiative code-named "Project Libra" to build a cryptocurrency-based payments system, The Wall Street Journal reported on Friday. The social network plans to launch a digital coin that its users can transfer to one another and spend on Facebook and elsewhere, and it has spoken with "dozens of financial firms and online merchants" as it seeks investment and launch partners, the report said. Facebook is also said to be working on a virtual checkout that would allow its users to shop on other websites, and it could reward fractions of coins to users who watch ads, engage with content, or make purchases. Watch Facebook trade live. Facebook has been working for more than a year on a secret initiative code-named "Project Libra" to build a cryptocurrency-based payments system, The Wall Street Journal reported on Friday. The social-media giant plans to introduce a digital coin that its more than 1.5 billion users can transfer to one another and spend on Facebook and other websites, the newspaper reported. Facebook has spoken with "dozens of financial firms and online merchants" as it seeks to raise about $1 billion in investment and enlist partners to help launch the system, according to the report, which cited people familiar with the matter. Facebook declined to comment on the report. "Like many other companies Facebook is exploring ways to leverage the power of blockchain technology," a Facebook spokesperson said in an email to Business Insider. The social network has courted Visa, Mastercard, and the payment processor First Data, according to The Journal. It has also approached e-commerce companies and apps about accepting its coin and investing in the project, luring them with the prospect of zero card-processing fees. Facebook plans to back its coin with dollar reserves to stabilize its value and make it less volatile than bitcoin and other cryptocurrencies, according to the report. Introducing a "stablecoin" may also be a response to mounting concerns about the privacy and safety of its users, as cryptocurrencies claim to offer anonymity and security. There are risks, however, as cryptocurrency deposits have been misused, misplaced, or stolen on several occasions. The company is also working on a virtual checkout that consumers could use to make purchases on other websites, similarly to how people can use their Facebook credentials to log in to other sites, according to The Journal. It's also considering paying users fractions of a coin to watch ads, engage with other content, or shop on its platform, the report added. Bloomberg and The New York Times previously reported that Facebook was developing a digital coin to allow WhatsApp users to transfer money. NOW WATCH: Here's what 'Game of Thrones' stars look like in real life