X readies P2P payments for 2024 debut

Elon Musk threw down another gauntlet, this one challenging financial institutions and payments companies, in particular one payments disruptor he helped to create, PayPal. In a Jan. 9, 2024, message posted to Musk's social media platform X (formerly Twitter), the serial entrepreneur confirmed what many had suspected since he purchased the platform: X is being positioned to go beyond content creation and distribution to disrupt the payments space.

The message was posted just days before X was granted a money transmitter license by Utah, making the "industry state" the 15th to green-light the social media platform's request for a money transmitter license. Money transmitters are regulated primarily by the states (typically state bank regulators) and facilitate money exchanges between individuals (not unlike Venmo, Cash App and PayPal).

Musk has repeatedly said he wants X to become "the everything app," akin to WeChat, the popular social media and mobile payments app that dominates in China with over 1 billion users.

"2023 was foundational for X, and 2024 will be transformational," Musk asserted in his Jan. 9 post. He extolled X's accomplishments in 2023 and listed plans for 2024. Among other things, Musk wrote, "We will launch peer-to-peer payments, unlocking more user utility and new opportunities for commerce, and showcasing the power of living more of your life in one place."

The blog post offered no specifics. However, in an October 2023 call with staffers, Musk made clear that he wants X to become the go-to app for all things financial, not just payments. "When I say payments, I actually mean someone's entire financial life," Musk told staffers. "If it involves money, it'll be on our platform – money or securities or whatever." He added that his ultimate goal is that users "won't need a bank account."

Competing with the past?

Musk, who finished out 2023 as the world's richest man, is no newbie to payments. He started an online banking company, X.com, in the 1990s. That company was eventually renamed PayPal and went public in 2001, only to be acquired by eBay shortly after. It wasn't until 2015 that PayPal was spun off from eBay to again become a public company.

Despite his previous successes—like disrupting the automotive industry—analysts have suggested Musk faces an uphill battle for P2P market share.

"Setting aside X's seemingly never-ending list of scandals under Musk's leadership, it will also be up against entrenched competition for P2P services," Insider Intelligence wrote. The research firm forecasts 170.4 million Americans will use mobile P2P payments this year, fewer than two out of three (62.6 percent of) mobile phone users. But these consumers already have established preferences. Insider Intelligence estimates that Zelle dominates with 85.7 million U.S. users, followed by Venmo (68.3 million) and Block's Cash App (50 million). And feature innovation in digital wallets makes for stickier wallet preferences. PayPal, for example, has added digital smart receipts and package tracking features, the research firm noted.

Innovations like these by existing wallet providers "will make it that much harder to convince consumers to switch to a new P2P platform like X," Insider Intelligence stated.

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