Facebook has started testing its digital currency wallet Novi. David Marcus, the head of F2 (Facebook Financial), Tuesday announced that that company is rolling out “a small pilot” of the wallet app in two countries — the US and Guatemala. Users will be able to “send and receive money instantly and securely” without any fees. According to David, this pilot program will test the core features of the service, as well as Facebook’s “operational capabilities in customer care and compliance.”
Launched in June 2019 as Calibra, Facebook later renamed its digital currency wallet to Novi. The company also has its own cryptocurrency called Diem (formerly Libra) in the pipeline as part of its broader payments project. But regulatory hurdles mean Novi is launching without it. For this pilot, the digital wallet will use the Pax Dollar (USDP), which is the eighth-largest stablecoin currently. Coinbase will provide custody services for Novi.
But David notes that Diem will eventually arrive on Novi after it has overcome the regulatory hurdles. “Our support for Diem hasn’t changed and we intend to launch Novi with Diem once it receives regulatory approval and goes live,” he said. “We care about interoperability and we want to do it right.”
Facebook is promising to give utmost priority to the privacy and security of user information. All financial information stored in Novi will be encrypted. The app also has built-in protections against fraud, while a dedicated team will be keeping track of any suspicious activities. If they determine an unauthorized transaction on Novi, the company will provide a full refund. Additionally, a 24/7 Novi Customer Care team will be available via in-app chat in English and Spanish.
How to use the Novi digital wallet?
As said earlier, Facebook is piloting its digital wallet Novi in parts of the US and Guatemala. Interested users in these regions can download the app on their Android smartphones or iPhones and sign-up using a valid government-issued ID to get started. The company notes that the pilot program will be available to a limited number of users initially. So some people may have to wait longer for approval.
Those who have access to Novi will be able to add money to their accounts using a debit card. They can then send money from their account to a contact who also has a Novi account. The recipient can withdraw the money in their local currency. They can pick up cash from a nearby location or transfer the amount to their bank account. Facebook says these options may vary by country.
As David promises, Facebook will not charge users for money transfers through Novi. Instead, the company plans to offer merchant payment services through the app and make a profit from it. Person-to-person payments will remain free.
Novi will be available to more people, and in more regions, after the pilot program is over. We will be keeping an eye on it and let you know once the service rolls out widely.
Lawmakers are already calling on Facebook to shelve Novi
Hours after David announced the Novi pilot, lawmakers have called on Facebook to stop it. A group of five Democratic senators has sent a letter to CEO Mark Zuckerberg saying the company “cannot be trusted to manage a payment system or digital currency when its existing ability to manage risks and keep consumers safe has proven wholly insufficient.”
“We urge you to immediately discontinue your Novi pilot and to commit that you will not bring Diem to market,” the senators wrote. It will be interesting to see how Facebook responds.