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After months of rumours and speculation surrounding Elon Musk’s plans to turn Twitter into a superapp, the "chief twit" has revealed new details about his vision for payments on the social media platform. Its success, however, depends on whether he can make the service stand out, experts say.
After a four-month legal battle and a social media spat, on October 27 the world’s richest man completed the $44bn deal that gave him ownership of Twitter.
Payments have formed an important part of his plans from the very beginning. In May, the New York Times revealed that Musk is planning to increase Twitter’s “negligible” $15m payments revenue a hundredfold, to about $1.3bn, within five years.
Later in June, several media outlets reported that he was planning to turn Twitter into a WeChat-like superapp.
“You basically live on WeChat in China. If we can recreate that with Twitter, we’ll be a great success,” Musk was reported as saying on a call with Twitter employees.
In subsequent interviews, Musk added that “it is either converting Twitter to that or starting something new”.
Last Wednesday (November 9), in a live Q&A session, Musk provided more specifics about how he imagines payments on the platform.
“We can say okay you’ve got a balance on your account. Do you want to send money to someone else within Twitter? And maybe we pre-populate their account and say we’re gonna give you 10 bucks and you can send it anywhere within Twitter,” Musk suggested.
“Then if you wanna get out of the system, then you can send it to a bank account and attach an authenticated bank account to your Twitter account.
“The next step would be let’s offer an extremely compelling money market account to get an extremely high yield on your balance. Then why not move cash into Twitter … and then add debit cards, cheques, whatnot,” Musk continued.
He added that he wanted users to be able to buy products “effortlessly” on Twitter with a single click.
Twitter’s current payment features include the possibility to tip creators on the platform and charge subscription fees for exclusive content, such as newsletters. However, Musk’s plans could make it a much more comprehensive service.
To be able to carry out these services, Twitter filed a money transmitter application with the US Treasury’s Financial Crimes Enforcement Network (FinCEN) on November 3. If granted, the licence will enable the platform to conduct money transfers, exchange currency or cash cheques in the US.
Twitter to shake up the current payment landscape?
Building a massive customer base is a challenge for most payment firms and a key factor in their ability to scale. The reported 238m active daily Twitter user base puts the social media platform in a very advantageous place.
However, experts agree that simply by adding payments, Twitter is unlikely to write history.
“Adding payments to Twitter will bring Twitter more revenue, and possibly open the gates for a more broad acceptance of crypto payments,” Robert Andersen, founder of Grape ID, told VIXIO.
But “what secret sauce is Twitter introducing? None,” Andersen stressed.
Twitter would not be the first social media giant to get into payments.
Facebook users can also add their card details to MetaPay and make donations, purchase games or buy event tickets. However, MetaPay has not become a significant player in the payments ecosystem and Facebook’s foray into offering (P2P) payments on WhatsApp in Brazil was initially shut down after a regulatory backlash.
“Combining social media and e-commerce is a trend so the platforms can capitalise on their existing user base,” Renata Thiebaut COO of consulting firm Green Proposition, explained.
But “Musk will seek more than just adding e-commerce functions to Twitter”, she added.
“With so many players in the payment space, Twitter will need to create some major differentiators in order to stand out; however, it can be done,” Joe Karasin, chief marketing officer of CircleIt, agreed.
Square’s CashApp is a good example of a payment tool that has been wildly successful despite the heavy market share being held by PayPal and Venmo at the time, Karasin explained.
Twitter could also benefit from the “celebrity status” of its owner, although it could be “a double-edged sword”, according to Karasin.
Crypto as well
Considering Musk’s previous endeavours in the crypto space and his strong affiliation with the Dogecoin meme coin, it came as no surprise that he said his payments plans involve both fiat and crypto.
The fact that Binance contributed to the deal with a $500m stake also suggests that crypto has a part to play in the future of the social media platform.
Crypto would not be a new concept to Twitter. The platform already allows users to tip creators in crypto and the platform has grown to be a significant place for the crypto industry to exchange views.
“Musk is bullish on cryptocurrency, so I would suspect it will play a major role in the Twitter payment app,” Karasin said.
According to Andersen, this could be “the first step towards mass adoption, but it could also risk the promotion of more fraud and backfire causing regulators to force a cease-and-desist on Twitter crypto or result in massive lawsuits”.
The cryptocurrency space has been facing an enhanced regulatory focus in recent years, regarding privacy, security, and money laundering, and there will likely be a “heavier exploration into what is being done on Twitter”, Karasin noted.
According to Caitlin Long, founder and CEO of Custodia, incumbent payment providers should watch out. By using the Lightning Network, a blockchain-based processing method that enables instant payments and can process billions of transactions per second, payments could circumvent the traditional financial system.
“AGAIN, Elon Musk's acquisition of Twitter is about PAYMENTS,” Long wrote on Twitter.
“Banks: get ready to be disintermediated by far better payment tech,” she claimed.
