Elon Musk's strategy to transform X into an "everything app" includes integrating a payments network into its core social networking service, according to a new report.
What Happened: Although specifics have been scarce, newly revealed documents submitted to state regulators provide insight into the plan, Bloomberg reported.
The proposed features resemble those of Venmo, allowing users to store money, make payments to others, and purchase goods and services in physical stores.
Musk has emphasized the need for X to diversify its revenue streams beyond advertising, which has traditionally accounted for over 90% of its income.
He has even suggested that X could become the world's largest financial institution.
The documents reveal that X does not plan to charge significant fees for its payment services, viewing them instead as a means to enhance "participation and engagement" on the platform.
Financial disclosures highlight the company's challenges since Musk's acquisition in late 2022.
X generated $1.48 billion in revenue during the first half of 2023, a nearly 40% decline from the same period in 2022, resulting in a $456 million loss in the first quarter of 2023.
Despite these setbacks, Musk remains the majority owner of X Holdings Corp., the parent company of X, with a nearly 75% stake.
The information comes from over 350 pages of documents and emails related to money transmitter licenses filed in 11 states, obtained by Bloomberg Businessweek through public-records requests.
X Payments, a subsidiary of X, has secured money transmitter licenses in 28 states and aims to be licensed in all 50 states, with plans to launch payment services across the U.S. later this year.
Initially, X intended to introduce international payment features by early 2024, but regulatory challenges have delayed these plans.
The company has informed regulators that it will pursue international money transfer applications after securing U.S. state approvals.
Musk and X representatives did not respond to requests for comment.
Why It Matters: The documents detail that X plans to offer a digital dashboard on its website and mobile app to manage payments, including sending and receiving money, storing funds, and viewing transaction history.
While small fees may be charged for some transactions, the primary goal is to boost user engagement.
Experts, including Harshita Rawat, a senior payments analyst at Sanford C. Bernstein, note the difficulties new payment providers face in attracting customers from established services like PayPal's
"It is very, very, very hard" to get people to switch services, Rawat said, highlighting the challenges of entering a market with strong incumbents.
Despite these challenges, X already collaborates with payments providers such as Stripe Inc. and Adyen for processing credit and debit card transactions, and plans to continue these partnerships. X Payments is banking with Citibank, according to documents.
Musk has shown a strong interest in cryptocurrency, evidenced by Tesla's previous holdings of Bitcoin and his vocal support of Dogecoin.
However, X has no current plans to support virtual currency transactions, having informed Maine regulators of this decision earlier this year.
