, 9 tweets, 4 min read Read on Twitter
Thread: How will Libra (L) reach mass adoption?

Many this week pointed out that L will scale on FB's 2.3b users.

But: Large user base != automatic adoption. Instead, (payment) networks have to incentivize users to join. Unclear yet how L will incentive users to join.

Facebook has been allowing payments on its Messenger platform since 2015, arguably without breakthrough success. If users didn't use Messenger payments back then, would they now start using them only because Libra is a cryptocurrency?


For (payment) networks, the value of the network for a participant increases with the number of participants in network. Number of participants not only is relevant to existing users though, new users also make their joining decision based on the no. of network participants.

For these reasons, payments networks in the past have incentivized new participants in different ways to join. BankAmericard (~later Visa) and Master Charg (~later MasterCard) mailed 100 million credit cards to Americans in the late 1960s.


History of credit card is of course more complicated than that though. Great article by @FoolMCochrane including history of credit cards: fool.com/investing/2019…

When WeChat Pay started out in 2013, only 8% of WeChat users used the payment app (30m of 355m). Only after WCP's first red envelope campaign growth started picking up. After 2014 red envelope campaign, WCP user more than tripled from 30m to 100m.


In Japan, Line Pay waived merchant fees to spur adoption of its mobile payment application while competitor PayPay offered users 20% cash back on purchases.



Consumers in India were naturally incentivized to use Digital Wallets like Paytm after the country voided the two largest denominations of its fiat currency.


So - what will Libra (Foundation)/ Facebook/ Calibra put in place?

One theoretical option: Merchants cut prices as they ditch card network fees ("Pay for Uber with Libra and save 2%").

Incentive structures that stimulate adoption will be instrumental to Libra’s success.

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