In a significant development, Elon Musk’s social media platform, X, formerly known as Twitter, has attained a money-transmitter license from Pennsylvania, marking its 13th such license in the United States. With this, not only is the social media platform closer to Musk’s dream of making X into an everything app, but it also positions itself as a significant competitor to PayPal.
This crucial approval, obtained earlier this week but not previously disclosed, signals a significant stride toward X’s ambition to introduce payment features within its platform.
Pennsylvania’s approval, disclosed through a public licensing database on Monday, empowers X to facilitate money transfers. This regulatory green light sets the stage for X to enable users to send money to one another, akin to the functionalities offered by platforms like PayPal’s Venmo.
Since Musk acquired Twitter in October 2022, he has articulated a vision to transform the platform into an all-encompassing “everything app,” reminiscent of the famous Chinese app WeChat. Musk envisions X as a messaging platform and a hub for various financial activities, including payments, taxi hailing, and merchant transactions.
According to a report from The Verge in October, Musk conveyed to X employees his expectation that new financial features would be “rolled out by the end of next year.” This includes a broader vision of users conducting their “entire financial life” on the X platform.
However, the path to offering payment services nationwide involves securing approval from each US state, a process that could span up to 18 months and incur substantial costs, potentially totaling several million dollars. Notable states that have already granted X money-transmitter licenses include Arizona, Georgia, Wyoming, and Maryland.
X’s expansion into financial services is seen as a strategic move to diversify its revenue streams beyond digital advertising, an arena that faced setbacks following Musk’s acquisition of Twitter. Advertisers withdrew or paused their spending on the platform after Musk endorsed an antisemitic conspiracy theory in a recent incident.
Industry experts acknowledge that Musk’s history of controversial statements and unpredictable decision-making at X pose significant challenges in gaining the trust of users and financial regulators. The success of X’s foray into payments hinges on overcoming this hurdle.
A U.S. state official, requesting anonymity, informed Reuters that their state is currently reviewing X’s money transmitter license application. Ongoing headlines surrounding Musk and X are factored into the state’s evaluation process, emphasizing the need for a careful review.
While X obtained its first state money-transmitter license in New Hampshire in June, the groundwork for state applications began before Musk’s acquisition, according to former employees familiar with the matter. The initial strategy involved obtaining licenses in states with relatively lenient requirements, followed by the pursuit of approval in more stringent states like New York and California.
Elon Musk’s plans for X include introducing a debit card and money-market accounts, as he shared during a live audio session on the platform last year. However, holding users’ funds would necessitate X obtaining a bank charter, posing yet another regulatory challenge, or forming a partnership with an existing bank, as highlighted by experts from NYU Stern.
