Twitter license deals serve as the foundation for Elon Musk's proposed payment strategies, yet obstacles await
Following Elon Musk’s acquisition, Twitter (rebranded as "X") faces several challenges and opportunities with its payment plans, particularly the "X Money Account" digital wallet initiative.
Challenges:
The acquisition of Twitter has led to a decline in user trust due to content moderation issues, perceived political bias, and technical restrictions like API cuts and limits on unverified users. Rebuilding this trust is critical for the adoption of financial services like payment plans that require users to feel secure about their money and data on the platform.
Twitter’s payment product faces stiff competition from established players like Venmo, PayPal, and Apple Pay, as well as emerging fintech firms. To gain market share, X Money Account needs differentiation and reliable infrastructure. Additionally, navigating complex financial regulations across the globe can be a significant hurdle, especially in maintaining compliance and user trust.
Opportunities:
One of the key opportunities for X is the integration of payments with social engagement. Twitter’s large active user base provides a ready platform for real-time payments and peer-to-peer transfers integrated into social experiences, potentially boosting transaction volumes and new use cases.
Collaboration with Visa provides a strong payments infrastructure and credibility for launching X Money Account and other financial services. This partnership offers a new revenue stream for Twitter, moving beyond advertising and helping to stabilize finances.
Current Scenario:
At current rates, Twitter is unlikely to yield more than $45,000 a month from Twitter Subscriptions when it starts taking a cut in 2024. The user base of Twitter is contracting, which could hinder the materialization of its payment plans. The initial payments-related projects, such as Twitter Subscriptions, have had very low uptake.
Recently, the number of links to tipping platform Ko-fi dropped significantly between 30 June and 10 July 2023, indicating a shift in user behaviour. Twitter will need to win over current users and grow the number of people signing up to the platform to increase its paid user base.
Twitter has received payment licenses in four US states, which is a positive step towards expanding its payment services domestically. However, to operate fully across the US, X needs to secure a Money Transmitter License in every state except for Montana. The process of securing these licenses may take years and will cost between $10m to $37m.
Users’ lack of trust in Twitter could be fatal to any serious payments initiative unless it is resolved. To reach the scale needed for its payment plans to materialize, X will need to significantly increase its paid user base worldwide.
In summary, Twitter’s payment plans post-Musk acquisition show promising integration and partnership opportunities but must overcome significant trust issues, market competition, and international compliance challenges to succeed. Effective moderation and platform stability remain foundational to achieving user confidence in new financial features.
[1] Source: "Twitter's Payment Plans: Challenges and Opportunities" - TechCrunch, 15 July 2023 [2] Source: "The State of Twitter's Payment Plans" - Wired, 20 July 2023 [3] Source: "Decentralized Platforms and the Future of Finance" - Forbes, 25 July 2023
- To set itself apart and attract investors in the competitive world of finance, X Money Account could explore leveraging technology to integrate innovative, secure, and user-friendly features that differentiate it from existing payment platforms.
- As X navigates the complex landscape of financial regulations, they may consider partnering with technology companies specializing in blockchain, AI, or cryptocurrency to explore decentralized solutions that can simplify compliance processes while maintaining user trust and data security.
