Novi finally hits the market

Facebook's digital wallet, called Novi, is finally making its appearance on two international markets. A half-hearted launch, however, since it is without Diem, the web giant's stable home corner.

FACTS

• Novi is being launched as part of a pilot project currently being conducted in the United States and Guatemala.

• Novi will be available from smartphones and will allow users to pay or receive funds instantly, securely and without fees, including for international payments.

• The currency used in these Novi wallet exchanges will initially be USDP, or Pax Dollar, developed by Paxos, a New York-based technology company specializing in blockchain. Facebook is also relying on a partnership with Coinbase, a leading cryptocurrency exchange platform, to launch Novi.

• 1 USDP is worth 1 USD.

• Customer journey:

  • first testers will be invited to download a dedicated application on iOS or Android,

  • they will then have to register as Novi users with an ID card and then load their account with a debit card,

  • They will then be able to select recipients of funds via the application, among the contacts saved in their phone. These contacts will in turn have to register as Novi users to properly receive the funds.

• USDP can be :

  • stored on the Novi wallet,

  • withdrawn in cash from a merchant partner of the network,

  • transferred to a bank account linked to the Novi account.

CHALLENGES

• Demonstrate its operability: Facebook specifies that this preview launch aims to demonstrate the effectiveness of the group's digital wallet and its ability to meet the expectations of end customers. The web giant justifies in this sense the use of a first stable coin that has already proven itself, to first judge the functionality of a system more than a new alternative currency.

• Filling the needs of the unbanked: Novi is presented as a tool to fight against underbanking and the financial divide around the world. Facebook estimates that 1.7 billion adults worldwide are unbanked and represent as many potential future users for Novi. Moreover, in Guatemala, 56% of the population has no access to financial services while almost 100% have a cell phone.

• Offering a new alternative to international payment services: The choice of Guatemala and the United States as test countries is not insignificant. Novi will primarily serve as a new international money transfer service. Money sent by friends and family living abroad to Guatemalans contributes to 14% of the country's GDP. And 90 percent of those remittances come from the United States.

• Supporting Diem: Novi's launch with the Pax Dollar forces Facebook to renew its assurance to Diem. Because the web giant justifies not trusting its own virtual currency. It nevertheless prefers to ensure the positioning of Novi on a market, with a currency already in circulation, before introducing Diem in a second time, after the currency has received the necessary regulatory accreditations.

MARKET PERSPECTIVE

• Facebook promised an international money transfer service to its 2.8 billion members almost two years ago. Diem, formerly Libra, was to be officially launched in January 2021. However, the discussions led by Facebook with different financial regulators have not been successful, forcing the web giant to make different postponements.

• Last August, the project seemed to be taking shape as Novi and Diem had received the approval of the American regulator for a launch in several states.

• The final twist is that this agreement now only seems to concern Novi. But Facebook apparently does not want to be delayed any further and prefers to ensure the launch of its Wallet, while waiting to be able to offer its entire range of services.