Elon Musk shared his vision for the future of Twitter with advertisers on Wednesday in a live call hosted on Twitter Spaces. There he suggested that users be given the ability to send money to others within the platform and later transfer it to their bank account.
The businessman admitted that many ideas are being considered and that they may not even be tested. Twitter is once again startup, and right now it is mired in deep media and labor chaos. But this approach is serious. The New York Times detected that Twitter had been Registered with the Financial Crimes Control Office of the United States Department of the Treasury last week. Every business needs to register before starting to do business with transfer services, currency exchange or check writing.
Transfers, payments, savings accounts..
On Thursday, during a chat with employees, which was leaked to The Verge, the CEO of Tesla said that “There is a great opportunity in payments”, because a bank transfer is nothing more than an exchange of information similar to a private message within Twitter. He suggested, under that premise, that Twitter could use its infrastructure to allow its users to “send money to others instantly.”
One of the ways to attract users to use this method is to offer competitive advantages over other payment systems, such as improving the interest that banks can offer. That was the original plan of X.com, the financial company he founded decades ago, which became PayPal. “PayPal currently only bundles a few features from the plan I developed in 2000.” What Musk wants is to turn Twitter into a bank with exclusive services given its integration with his social network to offer advantages that are difficult to match by the competition.
“We can give our users a certain amount of money to make payments within Twitter. For this we need the license that we have just requested. Then, to get it out, we created a high-yield money market account, so having balance on Twitter is more profitable than leaving it elsewhere. The ideal would be to simplify the lives of users who have a current account, a savings account and another in the money market by grouping them into a single one within our platform that is much simpler where it only matters if the balance is positive or negative».
To be compatible with the current financial system, the user would be issued a debit card linked to your Twitter balance, Musk said, and even the ability to write checks. It is vital that the balance allows payments to be made anywhere in the world.
The idea is not new. WeChat, the application that every Chinese uses daily for almost everything, uses this system. In addition to being an instant messaging application, it has a payment system that allows its users direct debit your receipts, make bank transfers or send tips to other WeChat users. All app users have a WeChat Payment account, a digital wallet service that allows them to perform the financial operations described above by linking a debit card.
All of this makes sense considering Musk’s close relationship with financial companies. Also for the Twitter’s dangerous dependency on advertisers. Currently, Coca-Cola or L’Oreal do not need to pay for advertising on Twitter because they have many more popular alternatives where they can place products directly, but Twitter does need your investment to continue to exist. By entering the payments and transfers business, Musk would have a new, more stable line of business that would positively impact the acquisition of new users by offering new features. That is why it is also important for Twitter to improve its instant messaging system, which will become a WhatsApp or Signal on steroidsas he promised – he makes many promises and few come to fruition – Musk in a tweet.
WeChat successfully agglomerated these financial services because China was booming without a clear mobile payment option or credit card use as widespread as in the West. Currently paying with the mobile is a possibility that the consumer already assumes, and immediate transfers from the mobile are made with Bizum, in Spain, or Verse. WeChat was also the default option for millions of users to communicate, such as WhatsApp. All Spanish and Latin Americans communicate via WhatsApp, but only a small part of them are active on Twitter.
If Twitter does not become a bank, its hypothetical plan is more complicated
Although legally complex, and it may be too ambitious If we take into account the chaotic situation in which Twitter is, Musk would get rid of many headaches in the future if he managed to materialize this idea. It is key to overcoming many problems in the future that would arise when turning the social network into a circular economy market within the application. Any app that allows you to transfer money from one site to another needs to be regulated. And that is expensive and troublesome. That’s why Substack, Shopify, etc. They use third-party payment gateways like Stripe Connect.
Also, Google and Apple they demand a commission for any payment that is carried out within the application that offers some type of functionality within the application, such as access to premium content or subscription to Twitter Blue.
And it is not only that they want a piece of the cake for allowing you to use their platform, but they also force you to use a certain payment method. This does not result in complications to offer a premium service within the application, which is why Twitter still uses Stripe, but it does make it substantially more difficult for creators to be paid for content under a paywall. Apple only allows certain fixed amounts (such as $0.99, $1.99, $2.99, etc.) and also does not allow money to be transferred directly from user to creator. Twitter would have to devise a complex and complicated system like the one Tumblr uses.
Telegram, in a similar situation, has resorted to having usernames auctioned off within an external cryptocurrency market rather than directly within the app for that very reason. “Unfortunately, Apple does not allow us to have creators monetize their work within Telegram without paying the 30% commission,” said Pavel Durov, the founder of the messaging application. “We had no choice but to remove paid content on iOS devices.” That is why tips on Twitter are through third-party services such as a simple link or through cryptocurrencies.
These ambitious projects come as top executives have announced they are voluntarily leaving their posts before Twitter has to submit its compliance report to the Federal Trade Commission, which has overseen the company’s privacy practices since 2011. All changes introduced in the app have been carefully reviewed over the last decade to avoid fines from this commission. But that with Musk has changed, and engineers are required to certify their work themselves, an employee said in an internal communication channel accessed by the New York Times.
“This will pose a huge personal, professional and legal risk for engineers. You are going to be pressured by management to make changes that are likely to cause major problems,” the employee wrote.
But on the other hand, Musk has said that Twitter needs millions of subscribers to survive, and he does not rule out that the company he just bought could go bankrupt. Their goal is for at least half of their revenue to come from users.. This goal is impossible to achieve without extra incentives such as paid content that will also have to be paid to creators or banking services. But it is necessary that all the organizations that have an eye on Twitter allow it, that the company endure until that moment and that the users trust its vision once again. Musk wants to create the WeChat of the West, but starts with fewer active users than his rivals and a worrying financial situation.