Visa, Mastercard, PayPal join Facebook to form crypto effort

If Facebook Inc.’s new digital currency goes according to plan, it could one day compete with payment giants Visa Inc., Mastercard Inc. and PayPal Holdings Inc. But for now, all three are set to work with the social-media company on the venture.

The currency, called Libra, will launch as soon as next year. It’s what’s known as a stablecoin, one that can avoid massive fluctuations in value so it can be used for everyday transactions. Industry experts and insiders say the payments companies want a seat at the table to help shape the new currency.

“It’s not unusual for the incumbents — Visa, Mastercard, PayPal — to partner with a disruptor,” Harshita Rawat, an analyst at Sanford C. Bernstein, said in an interview. “They would at least want to participate in how this product is being developed.”

New payment methods such as Apple Pay and other mobile wallets are often slow to take off, so any competition is likely to be years away. Still, the earlier payments companies come to the project, the more time they have to ensure their businesses don’t suffer.

None of these companies has been shy about pursuing collaboration or other strategic opportunities. PayPal alone has spent billions of dollars buying or investing in potential partnerships as well as competitors. While PayPal hasn’t ventured into cryptocurrencies before, it was a proponent of the blockchain technology that will be used to build Libra.