Twitter has taken its next steps towards facilitating payments in the app, with The Financial Times reporting that the company has begun applying for regulatory licenses in US states, the next legal requirement for providing payment services in the app.
Payments, which Elon Musk has a long history in, could be another way for Twitter to generate revenue, by enabling transactions between users, from which it would then take a small percentage. Musk has repeatedly flagged his vision for payments as part of his broader push to make Twitter into an ‘everything app’, which would provide more functionality and usage benefits.
As reported by FT:
“In November, Twitter registered with the US Treasury as a payments processor, according to a regulatory filing. It has now also begun to apply for some of the state licenses it would need in order to launch, these people said. The remainder would be filed shortly, in the hope that US licensing was completed within a year, one of the people said.”
From there, Twitter would also look to establish agreements with international regulators to enable payments in all regions.
As noted, payments are a part of Elon’s broader plans for a more functional app, which would replicate the utility of China’s WeChat, which is used by Chinese citizens for everything from ordering groceries, to buying public transport tickets, to paying bills, etc. WeChat has become such a crucial connective element, that it formed a key part of China’s COVID response, with authorities using the app as a means to manage COVID positive citizens and restrict their movement.
Musk isn’t ideally looking to use Twitter as a control device (I don’t think), but the broader concept is to add in more and more functionality, in order to both generate more income for the company, and make the app a more critical element in the interactive landscape.
Twitter’s already exploring several options on this front.
Several app researchers have uncovered mock-ups for Twitter Coins in the back-end of the app.
Via Twitter coins, users would be able to make donations to creators in the app, through on-profile tipping, but beyond that, Twitter’s also exploring options like unlockable tweets, paywalled video, and more, as it seeks to embed broader usage and adoption of in-app payments.
A big opportunity also exists to facilitate remittance, or sending money to family and friends, which is a key use case in many regions. Remittance payment services often charge processing fees, and various social apps have been trying to find new ways to facilitate such without the same costs, with the idea being that once people are moving their money in-app, they’ll then be more likely to spend it in the same place.
Thus far, social platforms that do offer payments haven’t been able to embed this as a use case – but maybe, with Musk’s experience, knowledge and connections, he might be able to make this work in tweets.
Elon, of course, got his start in payments, with his first company, an online bank called X.com, being bought out by PayPal in 1999, his first big business win. And while his focus has since shifted to electric cars and rockets, Musk has keen understanding of the digital payments space, and how it can be adapted for varied usage.
According to reports, Musk told Twitter investors in May last year, that his aim was to see Twitter bring in about $1.3 billion in payment revenues by 2028.
That would give the company a sorely needed boost. After Musk’s cost-cutting efforts, which have resulted in the reduction of around 70% of Twitter staff, the company could be on track to potentially break even this year, or close, but a lot has to go right to get the platform back on track. And with advertisers continuing to back away from Twitter spend, it’s not looking good, while subscriptions to Twitter Blue are unlikely to provide much relief, at least at this stage.
As such, the shift into payments can’t come fast enough, though it’ll still be some time before we see the possibility of in-app payments.
Also, while Musk has made it clear fiat currency will be the main focus of this push in its initial phase, cryptocurrencies could also, eventually, be included. The price of Dogecoin, Musk’s favorite crypto offering, rose to a 24-hour high after news broke of Elon’s expanded payments plan.
Will payments be the answer to Twitter’s revenue woes? Maybe, if Elon’s vision for billions in payments revenue comes to fruition – and with his previous track record, you can’t dismiss the notion entirely.
But it’ll take time, many approvals, and many more steps before we reach the next stage.