Introduction
Elon Musk’s social media platform X, previously known as Twitter, has taken a significant step forward in its quest to offer payment features. It recently obtained a money-transmitter license from Pennsylvania, becoming the 13th U.S. state to grant such approval. This latest development, although unreported until now, puts X in a position to facilitate money transfers and eventually enable users to send money to one another, similar to PayPal’s popular Venmo service.
The Vision for X
Since Musk’s acquisition of Twitter in October 2022, his vision for X has been to transform the platform into an “everything app,” resembling China’s widely-used WeChat. While WeChat allows users to send messages, it goes further by offering additional functionalities like hailing a taxi and making payments to merchants. Musk envisions X as a platform where users can conduct their entire financial life. An October report from The Verge revealed that Musk had informed X employees of his intention to roll out new features by the end of the following year.
State Approval and Future Challenges
To offer payment services across the United States, X must obtain approval from each state. Currently, the company has received money-transmitter licenses from states including Arizona, Georgia, Wyoming, and Maryland. However, this approval process is expected to take up to 18 months and cost several million dollars. According to Aaron Klein, a senior fellow at the Brookings Institution focusing on financial technology and regulation, gaining approval from all states remains a significant hurdle for X.
Trust and Controversies
Elon Musk’s history of controversial statements and his unpredictable decision-making at X pose potential challenges in terms of gaining the trust of users and financial regulators. As X enters the payments arena, Sabrina Howell, an associate professor of finance at New York University Stern School of Business, believes that building trust will be the company’s foremost challenge. X declined to comment on this matter.
Future Plans for X
X’s push into the payments landscape may extend beyond money transfers. During a New York Times DealBook event, Musk expressed interest in eventually offering a debit card and money-market accounts through the platform. However, these plans may encounter additional regulatory hurdles, such as obtaining a bank charter or forming a partnership with an existing bank. NYU Stern’s Howell highlighted this as a potential requirement for X to hold users’ money securely. That said, despite the challenges and regulatory complexities, X’s move towards offering payment features brings us closer to witnessing the transformation of Twitter into a multifaceted financial platform under Elon Musk’s leadership.