Facebook announced that is rolling out a small pilot of the Novi digital wallet app in two countries — the US and Guatemala. People can send and receive money across borders instantly, securely, and with no fees.
„We intend to migrate Novi to the Diem payment network once it receives regulatory approval. The goal for Novi has been and always will be to be interoperable with other digital wallets and we believe a purpose-built blockchain for payments, like Diem, is critical to deliver solutions to the problems that people experience with the current payment system,” Facebook said in the press release.
„We chose USDP so that we can test our systems with a stablecoin that has been operating successfully for over three years and that has important regulatory and consumer protection attributes. USDP reserves are fully backed by the US dollar and are held 100% in cash and cash equivalents. This means that people can easily withdraw their money in their local currency when they choose. We chose Coinbase, which manages 180 B assets in US dollars on its platform, to provide custody solutions for the secure storage of our customers’ funds.” – according to the statement.
„We’re doing a pilot to test core feature functions, and show our operational capabilities in customer care and compliance can serve people well. We’re also hopeful this will demonstrate a new stablecoin use case (as a payments instrument) beyond how they are typically used today,” said in the announcement David Marcus, Facebook’s head of Novi.
Why Guatemala?
The US-GT remittance corridor is an important one. In Guatemala, 56% of people do not have access to basic financial services, despite nearly 100% having access to a mobile phone. Money sent from abroad makes up more than 14% of Guatemala’s GDP, according to the World Bank, with as much as 90% of these funds coming from communities in the US, according to Pew Research.
This pilot uses USDP (Pax Dollar) through partnerships with Paxos and Coinbase „so we can focus on testing our systems” Marcus said. USDP is a stablecoin that’s been operating successfully for over three years and has important regulatory and consumer protection attributes.
„I do want to be clear that our support for Diem hasn’t changed and we intend to launch Novi with Diem once it receives regulatory approval and goes live. We care about interoperability and we want to do it right,” Marcus explains.
How it works
To try out Novi, people can download the app from the Apple AppStore or Google Play Store. With this iplot version, a limited number of people will be able to access Novi at the start, so some people may be placed on a waiting list when they sign up.
People can sign up for Novi using a valid government-issued ID and add money to their accounts with a debit card. Their recipient should also sign up for Novi before they’re sent money.
People will find their recipient in their contacts, enter an amount and, if they want, a personal note, then review the transaction.
On Novi, 1 USDP is equal to 1 US dollar. People will send USDP, but their recipients can withdraw the money in their local currency. They can keep the money in their Novi balance or withdraw it by picking up cash at a nearby location or transferring it to their bank account. These options vary by country.
Novi Customer Care team is available to help 24/7 in-app chat in English and Spanish.
The business model beyond the pilot
„We’re a challenger in the payments industry. We’ll offer free person-to-person payments using Novi. Once we have a meaningful customer base, we can offer cheaper merchant payments and still make a profit on merchant services,” Marcus said.
„Scaling Novi will take time and this pilot is a great chance for us to learn from our early customers. We want to make sure that our wallet has been fully tested before we open Novi up to more people. We have an opportunity to 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’m eager for us to start the journey,” Marcus concludes.
Banking 4.0 – „how was the experience for you”
„So many people are coming here to Bucharest, people that I see and interact on linkedin and now I get the change to meet them in person. It was like being to the Football World Cup but this was the World Cup on linkedin in payments and open banking.”
Many more interesting quotes in the video below:
