WhatsApp Pilots Crypto Payments

Meta's Novi wallet offers free digital currency transfers.

The popular messenger service WhatsApp is piloting crypto payments in the U.S. WhatsApp users can now connect to the Novi wallet to send and receive crypto, without ever leaving WhatsApp. It's as easy as sending a message or photo.

How the new WhatsApp crypto payments work

Meta (Facebook) is behind the Novi project, currently piloting in Guatemala and the U.S. However, only U.S. users can access the new WhatsApp transfer service right now.

U.S. residents need to sign up to a waitlist to use the WhatsApp payment functionality. It works with only one currency -- the dollar-pegged stablecoin Pax Dollar (USDP).

Here's how it works:

1. Create a Novi wallet. Novi began piloting its wallet in October. To set this up, the app asks for some personal info and a photo ID. Novi may require additional information as well.
2. Transfer money through WhatsApp. Click the paperclip icon you'd use to send a file, contact, or photo. Then choose "Payment" and follow the instructions to log into Novi.

Novi promises that there are no fees to send money from one person to another. This sets it apart from major cryptocurrency exchanges, which often charge a deposit or withdrawal fee.

With Novi, there's no charge to deposit or withdraw money, no markup on the transfer rates, and no charge for an international transfer. However, there may be banking fees and taxes to pay on certain transactions.

As for security, Novi says it will refund any money from unauthorized transfers. It also commits that any personal information you provide will be encrypted.

What it means for crypto investors

The Novi wallet and WhatsApp functionality mark another attempt by Meta to move into the cryptocurrency space. The company has faced repeated regulatory hurdles in launching its own stablecoin, Diem. Instead, it has partnered with Paxos and Coinbase to use the Pax Dollar in the Novi wallet -- at least for now. Meta still hopes to launch its own Diem stablecoin.

It is hard to say what this means for the cryptocurrency industry as a whole. On the one hand, any increased adoption is positive, and Novi users could land big savings on international transfers.

The World Bank estimates that 6.3% of every dollar sent internationally is lost to remittance fees. It isn't clear how much people will pay to convert Pax Dollars into their native currency. But if Novi can roll out free transfers worldwide, it would almost certainly make a huge difference to people who transfer funds internationally.

On the other hand, many long-term crypto enthusiasts believe the involvement of massive industry players like Meta runs contrary to the whole ethos of cryptocurrency. Decentralization -- cutting out the middleman -- is one of the key ideas behind Bitcoin (BTC) and other cryptocurrencies.

Decentralization doesn't only apply to finance. For example, blockchain technology could also change the way people use social media platforms. A blockchain-based, decentralized internet could help users take back control of their personal information.

But Meta's move into digital currencies does the opposite. It puts Meta -- which has already come under fire for the way it monetizes users' personal data -- back into the middle of these transactions.

As more and more big businesses get involved in the crypto space, an ideological battle is emerging between decentralized, community-run projects and centralized, corporate entities.

Established companies want to embrace blockchain technology, but not necessarily the cryptocurrencies that use it. If they succeed, it could change the face of the cryptocurrency industry.

Stablecoin regulation is coming

We'll very likely see new rules on stablecoins in the near future, and it will be interesting to find out whether these impact WhatsApp's crypto payment function. Meta says the Pax Dollar is a stablecoin with "important regulatory and consumer protection attributes." But it isn't clear how even existing stablecoins will fare if new regulations require them to follow federal banking laws.

Read more: Could Stablecoins Topple the Crypto Industry?

Meta could be a big contender in the digital payment space. As a consumer, it's hard to argue with free transfers. But there are still a lot of moving parts to consider.