Elon Musk's X: Disrupting Finance or Just Hype?
Musk has said he wants to turn X into a ‘financial super app’, a goal he has had since using PayPal. Specifically, Musk targets to transform X into a financial app that goes beyond the social networking aspect. This dream is linked to previous attempts to rename PayPal as “X. com” when providing a diverse range of financial services. Though he has experienced pushback from and was ultimately fired from PayPal, Musk continues to hold this vision in place through X.
Regulatory Hurdles
As X is to be used as a financial platform, getting necessary approvals to engage in payment processing is essential. As for X, Musk’s initial plan was to make global payments by the year’s end, but delays have been caused by regulations and now only allow payments within the USA. X Payments has achieved money transmitter licenses in 28 states, which is the first move towards transaction processing. Though, the full approval is still lacking and expanding these services internationally is even more challenging. The conflict of interest with several governments such as Australia, Brazil, and Germany might escalate and delay the approval processes further.
New Revenue Opportunities
Musk’s long-term strategy with X also involves the development of new sources of revenue by leveraging X’s payment aspects. Bloomberg states that X is to be a payment gateway for all online transactions like PayPal or Venmo, but will not necessarily be directly paid by the users. According to the documents, payment will increase user activity and the number of users on X In the future, X can charge merchants commissions for selling products inside the app if the regulators allow this. As for now, X strives to persuade its users to deposit money to X accounts, which, for example, may involve providing users with savings accounts that offer higher interest rates for using X instead of other services.
Challenges and Skepticism
Failure is evident from the experience of Twitter and other social apps where attempts to implement payments, in-stream shops and other affiliated products have not been impressive. Moreover, Musk’s openness to various political and social issues, which he shares using social media, have also tainted his image, and thus affecting users’ confidence in X as a financial platform. Perception of risks is a major factor and users need to feel safe when using X to handle their money; this may not be possible with Musk.
