Amid attacks and criticisms, Twitter’s CEO Elon Musk is moving forward with his plans in introducing a payments feature in the app which gives it a new revenue stream thus making it an “everything app” or rather a super app to its 126 million users.
The company has applied for regulatory licenses across the US and initiatives are being spearheaded by Esther Crawford, director of product management, the Financial Times reported.
A Super App
State licenses are needed by Twitter to launch its payment services. Thus, the company registered itself with the US Treasury in November last year as a payments processor, a regulatory filing showed.
Twitter’s move would fulfill Elon Musk’s goal of helping the company out of financial volatility.
Before Musk’s takeover, Twitter in early 2021 was exploring the idea of allowing its users to receive tips, or digital payments, from their followers. That’s the start of a super app.
Boosting revenue
Musk previously asserted that the company was losing $4 million each day, so he laid out plans to boost the microblogging platform’s revenue by five times to $26.4 billion by 2028.
In its last financial report, the company swung to a net loss of more than $270 million in the second quarter of 2022, compared to a net income of about $65.6 million in the same period a year earlier.
Installing a payments service is not a novel move for Musk. In 1999, he co-founded X.com, one of the first digital banks, which later merged with Confinity to become PayPal, currently one of the world’s biggest FinTech companies.
If things pan out at Twitter, it would be another step in Musk’s bigger plan to create an “everything app” that would offer social media, e-commerce, peer-to-peer payments, and financial technology services.
However, Twitter’s move into payments could face regulatory challenges. Elon Musk has fired over half of the company’s employees, raising concerns that there may not be enough people to carry out an oversight role or to report any suspicious activity.
Challenges
But realizing Musk’s vision will require taking on new technological challenges, significant compliance burdens, and earning consumer trust. It is also likely to be expensive. 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.
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.
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