The WhatsApp messaging service said this week that it is experimenting with a new feature that allows US users to send money without paying fees, using cryptocurrency. The new payment service marks another example of how digital currencies are becoming more accepted in the US mainstream financial scene.
The encryption functionality will be supported by Novi, a recently launched digital wallet owned by the parent company of What'sApp Meta (formerly Facebook) that people can use to send money internationally. The company began testing Novi six weeks ago among a select group of users in Guatemala and the United States. In a joint tweet on Wednesday, WhatsApp CEO Will Cathcart and Novi CEO Stephane Kasriel said Novi will be available to select US WhatsApp users on a trial basis.
“People use WhatsApp to coordinate sending money to loved ones and now Novi will help them do it securely, instantly and for free,” Cathcart tweeted.
How it will work
Anyone using Novi in the trial period will send money via US Pax Dollar (USDP), a regulated cryptocurrency issued by the New York-based blockchain company Paxos Trust. The USDP is designed to be linked to the value of the dollar, according to the Novi website, as a way to avoid the kind of price volatility associated with Bitcoin and other cryptocurrencies. One Pax dollar is equal to one US dollar. Users add money to their Novi account via the free app, which automatically converts those US dollars into Pax.
Users with access to WhatsApp-Novi can select the function by pressing a paperclip icon, then selecting Payment. There are no fees for sending or receiving money, and there is no limit to the number of payments that can be made, Novi said.
It's unclear what Meta's long-term ambitions are for Novi, but if the service stayed, it would join an already crowded market of money transfer apps like the Zelle, Venmo, and Cash app.
Kasriel said Novi's pilot test allowed the company to "learn which features and functionality are most important to people and focus our efforts on making them even better." Kasriel and Cathcart have not provided a timeline for when the service might be open to all users or be made available in other countries.
What happened to Diem?
Meta's use of cryptocurrencies dates back two years, when Facebook launched its own digital currency called Libra. The Libra project drew close scrutiny from the federal government and was eventually scaled back to a shell of what it was meant to be. Later renamed Diem, it was the proposed currency for Novi's launch until regulatory issues forced Meta to switch to Pax.
Novi comes at a time when Pax dollars and other digital currencies are starting to win over more US investors. Bitcoin hit a record price of nearly $ 50.000 in February, partly because more companies are accepting it as a form of payment.
Ethereum and dogecoin also hit record prices earlier this year, as celebrities such as Snoop Dogg, Paris Hilton, Kanye West and others launched their name behind their favorite digital currencies. However, a new survey found that money managers believe highly volatile cryptocurrencies are not a good option for most retail investors.
