Ajay Banga, CEO of Mastercard, shared his concerns about Facebook’s Libra, in an interview with the Financial Times. He underlined the lack of transparency of Libra, also claiming that national payment systems are “stupid.”
Speaking against creating any natioal payment system, Ajay Banga told that developing that kind of system in a world where people and crime travel globally is “really stupid”. In addition, he noted that in the fully global technological world national payment systems become “three times more stupid”.
CEO of Mastercard mentioned:
“This idea of finding a way to have national control on certain kinds of payments is not new — it is a fantasy that has been going on for a long time.”
As examples of countries where governments have made efforts to create a national payment system, Ajay Banga referred to Australia, France, Brazil as well as Mexico. As he stated, local networks fragment the transaction data that is necessary to do analytical activities. This makes crime tracking much more complicated in an age where terrorists do not have any respect to borders.
It’s worth mentioning that Mastercard was one of the founding members of the Libra association. The other 3 main members were Visa, PayPal and Stripe. All these 4 members left the association in October, 2019 without any adequate explanation.
It appears that the main reason for this decision was compliance. All 4 main members reportedly refused to commit to “not do anything that is not fully compliant with local law.”
Mastercard’s CEO particularly indicated anti-money laundering, know your client and data management regulation.
One more cause is the business model of Libra. There is no clear explanation of how the Libra association would make money. Discussing this point, Banga mentioned that if there is no clear way of making money then it can be made in ways “you don’t like.”