X Is Taking Charge of Payments: Which Changes to Expect?

In a blog post published on January 9, X, the social media platform previously known as Twitter, confirmed its intention to release an in-house peer-to-peer (P2P) payment solution in 2024. This is big news, as it marks a significant step toward X achieving its goal of becoming an “everything app” with extensive financial capabilities.

This detailed overview explains the background of this upgrade, shares its preliminary implementation timeline, uncovers some of the key challenges this project may encounter along the way, and provides insights into its future prospects. Read on to find out all the details about this exciting venture!

Was It Planned for X to Become a Super App?

In fact, Musk initially launched an online bank X.com back in 1999 with an original vision of shaping it into an “all-in-one marketplace for all financial requirements”. Eventually, this endeavor rebranded and evolved into what we now know as PayPal.

Thus, it comes as no surprise that the resurgence of the X.com brand in 2023 was connected with payment-related objectives. According to Musk himself, the plan for the app is to not only introduce comprehensive communication features but also to enrich it with the capability to manage the users’ entire financial universe. Notably, this broader scope was the reason why Twitter’s brand was let go.

X’s Financial Capabilities: What’s in Store for the Users?

The news of X getting ready to roll out the P2P payments feature has created a buzz worldwide due to the solution’s potential convenience for users. In the beginning, the system is expected to process only traditional fiat payments, with a strong likelihood of it integrating crypto capabilities further along the journey.

What’s more, in a podcast Musk participated in back in 2023, he articulated his vision for an all-encompassing operating system similar to iOS or Android, consolidated into a single app. In other words, he envisions X facilitating a variety of tasks, from texting friends and staying updated on breaking news to purchasing items and handling financial transactions like rent payments.

Musk also expressed the belief that, if executed effectively, X could cater to people’s payment needs to such an extent that it might eventually constitute half of the global financial ecosystem.

What Is the X Payments’ Timeline?

Since the broadcast where Musk presented his vision for Twitter went live in October 2022, X’s team has been actively obtaining payment licenses in different states and developing the necessary software infrastructure to incorporate payments into the social media platform.

Therefore, while the concept of X offering core banking services remains a distant goal, the company is already taking significant strategic steps toward it. These moves are extremely promising as they reduce the app’s dependence on ad-generated income and pave the way for a more sustainable and resilient business model.

Top Challenges Linked to Implementing X Payments

Some of the key implementation obstacles X is currently trying to overcome include:

1. Divergence from Conventional Models

While Meta Pay, TikTok, and Snapchat venture into financial services, X diverges from them in terms of target audience and business model. Due to the fact that it operates within a closed-loop framework, X is a self-contained marketplace that relies on user posts having an inherent audience or market segment within the platform itself.

2. Intense Competition with Established Players

Established payment processors like PayPal and Stripe already have an established customer base and reputation in the industry. X, on the other hand, faces the need to figure out an effective way of attracting new users and convincing its existing customer base of 396.5 million users to adopt the novel payment features.

3. Regulatory Obstacles

While the approval for X to function as a money transmitter in some states is a positive step toward its goal, achieving it fully remains a complex task, especially in the context of global operations.

After all, each jurisdiction has its own set of rules and requirements that X must navigate and comply with. Moreover, these guidelines are subject to frequent changes, which adds an extra layer of complexity to the expansion process.

4. User Concerns

While modern consumers are generally enthusiastic about using innovative payment apps, many of them still worry about fraud, regulatory scrutiny, and the lack of FDIC insurance coverage. Besides, despite significant improvements to the X app, user trust has waned due to purchasable verification, Elon Musk’s controversial endorsements, and a decline in ad quality.

Thus, for X to reach its ambitious goals in the payment sphere, it’s essential for it to address these concerns and build trust among users. This can be done by implementing robust security measures, adopting transparent compliance practices, developing a solid marketing strategy, and exploring partnerships with reputable insurance providers.

How Likely Are X Payments to Succeed?

Despite some implementation hurdles and uncertainties, X still has the potential to become one of the most prominent Western super apps offering payments as a part of its suite of services. However, at this stage, it is impossible to predict whether this project will meet all the expectations that X’s executive team has set for it.