The race to converge US messaging apps with payment services has an unlikely contender for champion. Small, California-based encrypted messaging app Signal is testing an anonymous digital payments feature. It encapsulates everything that regulators are afraid of.
Making money from messaging apps remains a work in progress. Facebook (now called Meta) paid $19bn for WhatsApp in 2014 but has yet to extract revenue, though adverts and ecommerce transactions are expected. It has trialled in-app payments but only in Brazil and India.
Signal has vowed to never sell data or show adverts. Instead it relies on user donations. Although the app benefited from WhatsApp’s clumsy attempt to change its data sharing policy last year, it is estimated to have just 2 per cent of WhatsApp’s global user base. The addition of payments might add more.
Signal’s project lets users link MobileCoin wallets to their account. MobileCoin is a so-called privacy coin designed to hide user identities and their transactions. This fits Signal’s privacy-focused model. It also suits the needs of those hoping to move money without detection from law enforcement agencies.
For now, the project is too small to cause much concern. Using a wildly fluctuating cryptocurrency is not appealing. According to CoinGecko data, MobileCoin’s price spiked at more than $67 in April 2021 but now trades at less than $10. Nor is it easy to obtain. It is only available on a small number of exchanges.
This does not mean that the US Securities and Exchange Commission is not paying close attention. Messaging app Telegram abandoned its own cryptocurrency plans when faced with an SEC fight. Meta’s crypto project Diem has received regulator pushback. Project leader David Marcus has since left the company. Signal’s anonymous payments will not be cheered by anti-money laundering organisations.
The exit of Signal’s own boss Moxie Marlinspike — an adviser to MobileCoin — suggests the payments project will remain limited. Executive chair Brian Acton is now interim CEO. Acton, co-founder of WhatsApp, left Facebook after fighting over its plans to monetise the app. Commercial growth is not a priority. Regulators may be worried but rivals can relax.