Elon Musk¡¯s Twitter Getting Ready To Apply For License To Enter Payment Business In The US

As its CEO, Elon Musk, searches for new revenues to turn around the business, Twitter has begun applying for regulatory licences across the US and designing the software required to introduce payments across the social media platform, as per a UK based Financial Times report.

Plan To Apply For License Begins

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Esther Crawford, a fast-rising lieutenant of Elon Musk inside Twitter, has reportedly started to map out the architecture needed to facilitate payments on the platform with a small team, according to two people familiar with the company¡¯s plans.

The nascent moves to allow payments through the site are a critical part of Musk¡¯s plan to open up fresh revenue streams. Twitter¡¯s $5 billion-a-year advertising business has cratered since he bought the platform for $44 billion in October, with marketers citing concerns over its management and content moderation.

Musk Wants To Offer Fintech Services

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Musk has said he wants Twitter to offer fintech services such as peer-to-peer transactions, savings accounts, and debit cards as part of a master plan to launch an "everything app" that incorporates messaging, payments, and commerce.

In 1999, Musk co-founded X.com, one of the first online banks, which later became part of payments giant PayPal.

Crawford¡¯s team is forging ahead, including devising a vault for storing and protecting the user data that would be collected by the system, said two people with knowledge of the team¡¯s efforts, as per the report.

Twitter is also pushing forward with the regulatory checks needed before launching a payment service. In November, Twitter registered with the US Treasury as a payments processor, according to a regulatory filing. These people said it had now also begun to apply for some of the state licences it would need in order to launch.

The remainder would be filed shortly, in the hope that US licensing would be completed within a year, one of the people said. They added that the company would then seek to expand internationally in order to obtain regulatory approvals.

While Twitter had set up a subsidiary, Twitter Payments LLC, in August last year before Musk took over the company, Musk recently appointed Crawford, Twitter¡¯s director of product management, as the chief executive of Twitter Payments.

But delivering on Musk¡¯s vision will require taking on new technological challenges, significant compliance burdens, and winning consumer trust.

It is also likely to be costly: late last year, Musk approached Twitter¡¯s equity investors in an attempt to raise more capital, indicating that some of the money would be used to fund a "hiring spree" of programmers to build a "super app" that could process payments, said one investor who received the offer.

Prior to Musk¡¯s takeover, Twitter had been exploring some payment features around tipping creators and e-commerce. Musk¡¯s vision goes far beyond that, including exploring more ways for users to directly reward creators, for users to buy items directly through the platform, and for users to pay one another, according to three people familiar with the plans, as per the report.

Also Read: 'Don't Want To Be The CEO Of Any Company: Elon Musk

Crypto May Be Added To The Payment System

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"Dogfather" Elon Musk has said he wants the system to be fiat, first and foremost, but built so that crypto functionality could potentially be added at a later point, two people said.

In an early pitch deck to investors in the acquisition deal in May, seen by the Financial Times, Musk said he aimed for Twitter to bring in about $1.3 billion in payments revenues by 2028. The pitch deck was first reported by the New York Times.

Data from payments markets data group FXC Intelligence shows hundreds of thousands of Twitter users share links to third-party payment options either in their tweets or on their accounts. "Twitter is already a platform on which payments happen, so it¡¯s kind of a no brainer," said Lucy Ingham, head of content at FXC Intelligence.

Other payment experts have questioned whether Twitter can achieve a competitive scale, particularly in the US, where there is stiff competition in the space from groups such as Venmo, Cash App, and Zelle.

Twitter will also face high levels of regulatory scrutiny. The move into payments comes after Musk laid off more than half of the platform¡¯s employees, which has raised fears that its compliance staffing is insufficient.

Businesses that handle money transfers, currency exchange, or check cashing are required to notify authorities of any unusual activity.

As part of monitoring for fraud and suspicious transactions, user accounts have to be directly linked to a user¡¯s identity, according to Lisa Ellis, a payments expert and senior equity analyst at the research company MoffettNathanson.

Such regulations mean "many [tech companies] experiment and then give up," she said. "They find it to be a burden to ultimately bear the long-term investment and risk, where you can get fined if there¡¯s an issue, and you have to have a whole compliance infrastructure that has to be constantly licensed."

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