How Facebook’s Libra Currency Will Impact Global Payroll
*Image source: iGadgetware
Facebook’s plans to introduce a new cryptocurrency could have interesting implications for payroll.
Libra will be a blockchain-based payment system, with users banking cash in a digital wallet called Calibra, built into WhatsApp, Messenger and its own app. It will have a lot in common with PayPal, but won’t require users to have bank accounts or credit cards. There will be a fee, described as ‘negligible’, for every transaction. Like Bitcoin, Libra is to be blockchain-based, but will be tied to a basket of international currencies, so shouldn’t become a vehicle for financial speculation.
While it’s Facebook that’s behind the project, it will be controlled by an independent, non-profit-making Switzerland-based consortium, the Libra Association, which also counts Visa, PayPal, eBay, Mastercard and venture capital firms such as Andreessen Horowitz amongst its numbers. It’s not yet clear how these partners will work together or integrate Libra into their services. But the company is touting Libra as a ‘new global currency’ – and, as such, it’s hoping to see it taken up across the board. And that could include encouraging companies to pay staff in Libra, which it claims could simplify payroll for overseas staff.
In particular, Facebook believes that Libra could offer staff more financial stability than the currencies of many developing countries. A blockchain-based payment system would mean that banks no longer needed to act as intermediaries in foreign transactions, and wire transfers or BACS payments could become unnecessary. Payments could be made in real time, and with only the smallest of transaction fees.
Libra could also have something to offer freelancers and contractors, along with their employers. Libra’s programming language, Move, supports smart contracts, so that a payment can be made automatically when a specific target is reached. Similarly, blockchain can also be used to manage staff expenses.
Some organisations – such as the cryptocurrency exchange Kraken – are already paying staff in Bitcoin. And it’s been widely reported that Facebook itself is offering employees the opportunity to be paid in Libra – possibly with a financial incentive to do so such as a bonus or company discount. Other members of the governing consortium may well do the same.
However, payroll managers shouldn’t get too excited just yet. There are plenty of countries where banking is already cheap, quick and efficient, giving employers and workers little incentive to change.
There are also privacy implications – indeed, Facebook’s VP of messaging products David Marcus, who heads up the Libra project, recently tweeted: “We’ve heard loud and clear that you don’t want social and financial data commingled. We understand we will have to earn your trust.”
Most importantly, though, while Libra is due to launch next year, it faces significant regulatory hurdles – potentially in every country in which it wishes to do business. It’s unlikely to be available globally any time soon.
All the same, Libra’s a fascinating concept. And whether or not it takes off in the way Facebook is envisaging, certain aspects of it have clear advantages for payroll departments and employees alike.