Facebook [LIBRA] – MasterCard CEO explains why his company participated in the Libra Facebook project

Four months have passed since the start of the departure of the members of the Libra Association led by Visa and MasterCard payment companies, among other leading companies that left at about the same time in October 2019.

It was not surprising given the amount of criticism that the Libra project attracted. regulators and legislators alike.

This week, the Financial Times publication met with MasterCard CEO Ajay Banga to talk about the company's participation and its exit from the Libra Association.

In the interview published on Monday, Banga pointed out three main reasons that led his company to resign: Libra's business model, regulatory pressure and Facebook data integrity concerns.

Initially, as Banga revealed, Facebook sold the Libra project as a tool for financial inclusion, an idea that Banga was more willing to support.

However, halfway through the project's development phases, the story seemed to change when Facebook presented the idea of ​​the Calibra wallet, a patented software that would work with Libra tokens.

"He went from this altruistic idea to his own wallet," Banga said, adding that this did not "sound good."

After that, Banga said he didn't understand the Libra project completely, especially how he was going to earn the money and this was a red flag for him.

"When you don't understand how you make money, it is done in a way you don't like," he said.

After making Libra's idea public in June last year, the project faced a violent reaction that seemed to focus on the proven history of abuse of Facebook's data management policies.

To make matters worse, Banga revealed that some key members of the association would not commit to strict KYC (know your client) and AML (against money laundering) regulations.

He told the FT that "every time you talked to Libra's main defenders, I said" Would you put it in writing? "(And) they wouldn't."

However, the general issue for MasterCard's departure from the Libra project seems to be that Banga did not understand the project well enough and the introduction of the Calibra wallet did not make it easier.

The intersection between Libra and Calibra made him stumble. "If they pay you in Libra (…), they go to Calibras, they go back to pounds to buy rice, I don't understand how that works," he told the FT.

The Libra Association started with 28 members, but since then it has lost 8 of these companies.

The last company to leave is the telecommunications giant Vodafone, which announced its departure in January 2020 to focus on its own M-Pesa mobile payment application, which has great success, especially in parts of East Africa.