How will Libra make money? Mastercard CEO ignores it

MasterCard slammed the door of the cryptocurrency project Libra last October. And for its CEO Ajay Banga, this decision is explained by serious doubts about the economic model of Facebook and by a regulatory risk.

Scrambling with regulatory authorities to move the project forward Libra worn by Facebook? Many companies that have joined the cryptocurrency have chosen to preserve these relationships, like PayPal, as his boss explained a few months earlier.

Ajay Banga, the CEO of MasterCard, also believes in an interview with Financial times than Libra involves major risks in terms of compliance. Client identification, fight against money laundering, data management, all aspects on which Libra members did not formally commit, regrets the manager.

Libra: from a currency to a Facebook wallet

But the reserves of MasterCard were not limited to compliance. Ajay Banga says his attitude toward Libra has worsened as Facebook clarified its ambitions. According to him, the heart of the project was no longer the creation of a universal electronic money, but to support the development of an owner wallet, Calibra.

"They went from this altruistic idea to their own portfolio," said the CEO, for whom such a change was not acceptable. This was all the less the case since Libra’s economic model remains undetermined.

When you don't understand how money is earned, it is earned in a way you don't like, ”warns Ajay Banga.

Collaborate on a seemingly unprofitable project that primarily benefits the portfolio Calibra from Facebook, Libra's assets were lacking for Mastercard.

But the withdrawal from the business is probably also motivated by competitive motives, suggests an analyst interviewed by FT. A payment system based on blockchain could eventually become a real-time global payment network, posing an "existential threat" to private networks such as Mastercard.