Elon Musk is barreling forward with a plan to add payments—both traditional and crypto—to Twitter. According to a report by the Financial Times, the company is applying for money transmitter licenses from different states, while one of Musk’s key lieutenants has created a team to figure out how Twitter users can pay merchants and creators directly on the platform.
This is a good idea. As I’ve written before, payments are likely the reason Musk bought Twitter in the first place, and, after all, he has done something like this before—recall that, before Tesla and SpaceX, he helped launch PayPal. And if Musk’s projections that Twitter could bring in $1.3 billion annually from payments are even close to correct, then the company will have a much-needed new revenue stream.
And God knows it needs one. Twitter this week reportedly made good on its first debt payments to lenders (even as Musk stiffs the company’s landlords), which cost a cool $3 million. For context, here’s Bloomberg: “Annual interest is expected to exceed $1.2 billion, some of which carries floating rates that could continue to increase as the Federal Reserve hikes interest rates. Twitter paid less than $100 million of annual interest expense before Musk bought the company by loading it up with debt.”
This means it could be difficult for Musk to keep Twitter solvent long enough to execute on his plan to launch payments. And that will be a tall order for two reasons. First, unlike when PayPal burst on the scene around the year 2000, Musk faces some deep-pocketed competitors that are likewise trying to disrupt payments. These include Apple Pay, PayPal-owned Venmo, and even the banks themselves, which recently announced a Zelle-style consortium to create a digital wallet.
The other reason why Twitter will be hard-pressed to realize its payment ambitions is Musk himself. In the short time he’s owned the site, he’s done incalculable damage to it. Advertising revenue has plunged as big brands have bolted the platform after Musk rolled out the welcome mat for fascists and crazies of all stripes. Even hard-core conservatives are not happy as he has engaged in the sort of arbitrary censorship that Musk fanboys thought he would cure. And Twitter users of all persuasions are miffed because the platform has come to feel broken as new features misfire, and as Musk imposes heavy-handed controls such as refusing to let people opt out of its algorithmic feed.
All of this matters because, if Musk is going to use his new toy to disrupt payments, he is going to need users to try out its new payment and crypto features. And at the rate he’s going on, there won’t be enough of them left to generate anything close to that $1.3 billion of annual revenue he’s promised.
Jeff John Roberts
jeff.roberts@fortune.com
@jeffjohnroberts
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