Elon Musk wants Twitter to be an “everything app,” which includes peer-to-peer payments, and has taken the first steps toward that goal by securing crucial financial licenses in three states. But, according to company insiders who spoke to Fortune, the next steps are unclear as chaos reigns, regulatory hurdles loom, and potential competitors like Venmo and PayPal dominate the market.
Under the ownership of the cost-cutting Musk, the social media giant has encountered numerous obstacles, including lawsuits and severe website malfunctions. More than 80% of Twitter’s workforce has been let go or resigned, leading to a scarcity of engineers with expertise in the platform’s legacy systems, hindering efforts to address the myriad bugs plaguing the platform. It’s also left fewer engineers to spin up a payments system seeking to serve hundreds of millions of users.
From the start of his tenure leading the social media platform, Musk has signaled that he wants the company to be something more—an “everything app” he calls “X,” mirroring China’s WeChat, which in addition to messaging allows for payments and e-commerce. Securing regulatory licenses is an important first step in enabling payment services, although some employees doubt that he can pull off the complicated logistics, even with newly appointed CEO Linda Yaccarino trying to build trust at the embattled company.
“I don’t think the everything app will happen within one year. You need revenue to support everything that has to happen to build it,” a former Twitter staffer with knowledge of the payments plan told Fortune. “Having said that, if Linda is able to strike good and high-value partnership deals, that can change things.”
Musk has long had ambitions to establish a comprehensive online banking institution. In 1999, he invested $12 million to cofound X.com alongside former Intuit CEO Bill Harris. The launch of X.com proved successful, with over 200,000 sign-ups recorded within just two months, a milestone especially impressive because it came at a time before most people were comfortable with online financial transactions.
However, the company faced a litany of issues that parallel Twitter’s today. According to Elon Musk: Tesla, SpaceX, and the Quest for a Fantastic Future, a biography of the billionaire written by tech journalist Ashlee Vance, X.com’s computing systems failed to cope with a rapidly growing customer base. The company’s website collapsed on a weekly basis and left the platform vulnerable to fraud, resulting in significant financial losses without a path toward profit. The lack of a cohesive business model and doubts about Musk’s decision-making compounded these challenges, which led the board to oust him as CEO. Tech mogul Peter Thiel took over and renamed X.com PayPal.
“Musk rarely lets a slight go unpunished,” Vance wrote in the biography. “Throughout this ordeal, however, he showed incredible restraint.”
Fast-forward to today, and Musk seems to have done everything but let this go. In an interview last month with CNBC, Musk says PayPal is “sort of a half-baked version of what it could be.” He has been vocal about his intolerance for boards, firing the Twitter board immediately upon acquisition, perhaps to avoid a similar coup like that at PayPal. He renamed Twitter as X, he has a son named X, and Musk bought X.com from PayPal in 2017 because “it has great sentimental value.”
He’s also reignited his hopes of building a global payments platform. Though Twitter flirted with payment services before his tenure—including setting up the subsidiary Twitter Payments LLC and dabbling with crypto—Musk floated payment tools as a potential revenue driver in a deck he presented to potential investors before the takeover.
“I think there’s potential to create a more efficient financial system,” Musk said in the CNBC interview, adding that it would be “poetic to fulfill ultimately the vision that I had for X over 23 years ago, and actually see that come to fruition.”
After Musk became CEO in October, Twitter began to apply for federal and state regulatory licenses, according to a January report from the Financial Times. Beginning in late June, Michigan, Missouri, and New Hampshire were the first three states to grant them.
Money transmitter licenses are a step below what’s required of trusts or banks—they allow companies to take money from users and send it, although they can’t hold deposits as a bank would. Securing money transmitter licenses in states across the country, Twitter could begin to implement peer-to-peer payment services similar to Venmo or PayPal.
Austin Campbell, an adjunct professor at Columbia Business School and financial services expert, said companies apply for money transmitter licenses “because you actually want to handle the money and it’s the fastest route to do it with the least brain damage,” compared with applying for trust or banking charters. “This just tells me Elon wants in on payments.”
With Twitter likely to be approved as a money transmitter in most states, the looming question is whether it would be able to compete with established players like Venmo or PayPal. Stephanie Choo, a partner at fintech-focused investment firm Portage, said Twitter would need to be “10 times better” than rivals, which it could accomplish through rewards systems. Even then, there is little precedent for messaging apps implementing payment services outside of the “everything app” giants of Asia, with WhatsApp and Telegram both lagging with rollout.
Choo said the most interesting version of Twitter’s payments plan would be to build out globally, with competitors like PayPal and Wise still struggling to build comprehensive networks. The main obstacle to international growth is securing financial licenses in every individual jurisdiction, and Choo said the commonsense path forward would be digital wallets, likely powered with crypto.
Although Musk has signaled interest in crypto through his other companies and professed love of Dogecoin, enabling crypto payments could create regulatory headaches for the social media platform. Even with money transmitter licenses, Twitter would have to set up accounts with banks, which have shown a reluctance to onboarding crypto-focused businesses.
“The harder part now is the amount of regulatory scrutiny to have a regulated bank work with you, and I just don’t see Twitter buying a bank, which is one of the ways to do this,” Choo said. “But I bet they have enough clout in market to get an operating account.”
The final hurdle would be empowering Twitter’s skeletal staff to build out a payment platform to compete with the giants. One current employee, who spoke on the condition of anonymity, said that the last count for full-time employees was just around 1,400, down from around 8,000 before Musk’s takeover. By comparison, PayPal has nearly 30,000 employees.
“There are certainly not enough people to fully implement anything new,” the employee said, “without inevitable issues.”
