‘If it Involves Money. It’ll Be on Our Platform,’ X Owner Says

Elon Musk is planning to add a variety of financial tools to the X platform, according to reports on a recent meeting Musk held with employees. 

According to a report in The Verge, which cited audio it had obtained, Musk said the new features would roll out in 2024 and extend well beyond payments. 

“When I say payments, I actually mean someone’s entire financial life,” Musk is reported to have said. 

“If it involves money. It’ll be on our platform. Money or securities or whatever. So, it’s not just like send $20 to my friend. I’m talking about, like, you won’t need a bank account.”

Musk has said many things in his relentless drive to remake the X platform in his vision after purchasing the company in 2022 when it was known as Twitter. However, the remade company does indeed seem to be positioning itself to take the dive into digital banking. 

Both The Verge and Mashable noted that X has been pursuing money transmitter licenses in the U.S. 

“We want money on X to flow as freely as information and conversation,” X CEO Linda Yaccarino said in a recent blog post that was mentioned by Mashable. 

“We have already secured first money transmitter licenses in several states, and we are moving toward launching a global payment system – more soon,” she wrote. 

Musk also has a significant background in banking. He made part of his early fortune in 1999 by founding X.com, which eventually became PayPal. Wikipedia notes that, at the time, X.com was “one of the first federally insured online banks.” 

Since then, fintech innovations in digital banking have only accelerated, laying the groundwork for the kind of super app that Musk envisions. Today, platform operators like X can use a growing variety of open banking APIs (application programming interfaces) to add many financial capabilities including payments, account and identity authorization, balance information, real-time risk assessment, investment access, and much more.  

Some licensed banks specialize in partnering with fintechs to create digital financial products that offer bank functions. They can also provide the licenses required for some of those digital products, such as loans or insured deposits. Other banks have created their own specialized digital apps to compete online and beyond their geographical footprint. 

X would also benefit from its scale. Prior to Musk’s purchase of the company – for $44 billion with $13 billion in loans from a variety of banks – the company had 259 million users by last November, according to a Reuters report this past summer. In Q2 2022 (prior to Musk’s purchase), Twitter reported in one of its last quarterly financial reports that it had 41.5 million “monetizable daily active usage” in the U.S. and 237.8 million worldwide. If X could turn a fraction of that base into mobile payments users, it could unlock significant revenue. In fact, X has already started to charge some users $1 to use the service.

Also, it nearly goes without saying that, after PayPal, Musk started and built one of the world’s most innovative car companies in Tesla and one of its most advanced rocket companies in SpaceX. If anyone has what it takes to turn the company formerly known as Twitter into a fintech, it would seem to be Musk. 

That doesn’t mean there aren’t headwinds for X. 

The company has shrunk since Musk’s chaotic takeover, according to Musk’s own public statements and a variety of reports, including this roundup by Bloomberg. Daily users on X were down 13 percent in September, year-over-year, according to the report. X’s top five advertisers reported they’re spending 67 percent less on advertising. And that $13 billion in debt is on X’s books, as reported in detail by Yahoo! Finance. 

“Twitter pre-Musk was rated junk, despite carrying significantly less debt than it does now,” the Wall Street Journal noted last month. 

That debt could slow Musk down by drawing scrutiny from regulators. The Journal noted that the banks that lent Musk those billions still retain the debt on their balance sheets. And as X has lost value, so has the debt. 

“Big hung deals don’t sit well with regulators, who have been making more diligent checks on banks’ financial footing following the failures of Silicon Valley Bank and others earlier this year,” the Wall Street Journal stated. 

“The longer the banks hold X’s debt, the greater the scrutiny is likely to be from regulators, who penalize lenders for having direct credit exposure to junk-rated companies.” 

Featured Photo: Elon Musk at the 2019 Tesla Annual Shareholder Meeting. Photo by Steve Jurvetson, Creative Commons.