WhatsApp is testing new crypto feature for sending money
The messaging service WhatsApp said this week it is piloting a new feature that allows U.S. users to send money without paying fees, using cryptocurrency. The new payment service marks yet another example of how digital currencies are becoming more accepted in the mainstream U.S. financial scene.
The crypto feature will be powered by Novi, a recently launched digital wallet owned by What'sApp parent company 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 U.S. In a joint tweet on Wednesday, WhatsApp CEO Will Cathcart and Novi CEO Stephane Kasriel said Novi would be available to some WhatsApp users in the U.S. on a trial basis.
"People use WhatsApp to coordinate sending money to loved ones and now Novi will help them do that securely, instantly and with no fees," Cathcart tweeted.
Anyone using Novi in the trial period will be sending money via U.S. Pax Dollar (USDP), a regulated cryptocurrency issued by blockchain company Paxos Trust of New York. 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 U.S. dollar. Users add money to their Novi account via the free app, which automatically converts those U.S. dollars to Pax.
There's a new way to try the @Novi digital wallet. Starting today, a limited number of people in the US will be able to send and receive money using Novi on @WhatsApp, making sending money to family and friends as easy as sending a message. 💸💬 pic.twitter.com/dGz3lejri7
— Stephane Kasriel (@skasriel) December 8, 2021
Users with access to WhatsApp-Novi can select the feature by pressing a paper-clip icon, then selecting Payment. There are no fees to send or receive money and there's no limit to how many times payments can be made, Novi said.
It's unclear what Meta's long-term ambitions are for Novi, but if the service sticks around, it would join an already crowded marketplace of money-transfer apps like Zelle, Venmo and Cash app.
Kasriel said the pilot test of Novi has allowed the company to "learn which features and functionality are most important to people, and focus our efforts on making those even better." Kasriel and Cathcart did not give a timeline for when the service might be open to all users or be made available in other countries.
Where's Diem?
Meta's use of crypto harkens back to two years ago when Facebook started its own digital currency called Libra. The Libra project drew intense scrutiny from the federal government and was eventually scaled down to a shell of what it intended to be. Later rebranded as Diem, it was the proposed currency for the launch of Novi 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 U.S. investors. Bitcoin reached a record high price of nearly $50,000 in February, in part because more companies are accepting it as a form of payment.
Ethereum and dogecoin also hit record-high prices earlier this year, while celebrities including Snoop Dogg, Paris Hilton, Kanye West and others have thrown their names behind digital currencies of their liking. Still, a new poll found that money managers believe that highly volatile crypto is not a good option for most retail investors.