Elon Musk, CEO of Tesla, crypto afficionado and now newly minted CEO of Twitter has recently outlined his ambitious plans to bring payments and other financial features to the platform. With the goal of turning Twitter into an “everything app”, Musk’s vision hit the news in a big way. The idea of a payments company born from a social media app has intrigued those in the industry and many are wondering about the logistics involved.
To find out more about this, The Fintech Times heard insight from several leaders within fintech to discover the initial reaction of the industry, and what some of the challenges Twitter may face should it go down the payments company route.
A blue tick for payments?
James Neville, CEO of payments company Citizen, said: “Without more details it’s hard to comment much but we’d say that payments are an obvious area to look at as Musk moves to improve Twitter’s bottom line. However, making it a success ties into some of the key issues that Twitter is wrestling with: trust and identity. Twitter has a long way to go to (re)establish confidence that members know who they’re communicating with, let alone who they might be sending money to – so there’s a lot hanging on that blue tick for digital payments to be a success.”
All about trust
Geoff Brown, Co-founder/CEO for Highline agrees that trust is a key consideration when thinking about Twitters venture into payments.
He said: “Payments are built on trust and recent trends aren’t good here. Could people trust that a Twitter handle is really the intended recipient? Can regulators trust money laundering controls are robust? Would people trust Twitter with additional personal information and access to bank accounts? From the transcript of Twitter’s company meeting, it sounds like Musk views a compliant payments infrastructure as a partial answer to bots and fake accounts, but maybe they need to clean up those issues first.
“On the positive side, Musk understands payments and there is a lot of great talent newly available (see Stripe, Chime, et al). The combined savings/credit product he describes is certainly in the Zeitgeist; Nirvana Money recently made a big splash unveiling its version of it at Money20/20. With access to 450 monthly active users as a foundation, a savings/credit product combined with P2P payments built into Twitter’s direct messaging could be a game changer. This assumes that the company can get its act together generally, though. We’ll have to wait and see.”
Been there, done that
Daniela Hawkins, managing principal at the consultancy Capco said: “Twitter and other social media networks have tried to do payments before. While those initiatives didn’t catch on with consumers, there’s still a tremendous amount of opportunity for companies to explore. Consumers in the US still must log into individual apps to use different payments rails (Venmo, Zelle, Cash App). It’s not the best banking experience. The issue, particularly in the US, is that consumers don’t associate social media apps with payments. That does make it a bit of an uphill battle for Twitter.
“Regulatory scrutiny also will be an issue. Money movement and banking are highly regulated. Elon Musk mentioned a high-yield savings account. That would suggest a bank partnership of some sort. But maybe Twitter pursues an industrial loan charter. Or a bank charter. There are still some questions about how this will come together.”
The embedded finance playbook
Alex Mifsud, CEO, at embedded finance provider, Weavr.io, said: “It’s not surprising that Elon Musk is turning to payments to breathe life into Twitter. This would be another example of the emerging embedded finance playbook: take a digital platform with high engagement and take the intrinsic value flows in-house.
“As Shopify, Toast and other digital businesses have shown, digital platforms can profitably become highly effective fintechs. Twitter provides rich ground – daily active users generating content, and therefore rich profiles, as well as advertisers looking to match those profiles to their goods and services. Add a layer of identity verification and payments and Twitter graduates to the ultimate electronic bazaar.”
A clever idea
CEO of digital and cloud experts CircleIt, Art Shaikh, thinks that getting into payments is a smart move for any company right now.
“Much like WeChat, the move in the industry has been to create super apps, or all-in-one solutions,” he said. “Twitter getting into this space is a big deal, as it would be the highest profile player in the space, and Elon Musk’s celebrity status will help lend credibility to it. However, there are a lot of unanswered questions surrounding security issues. Twitter’s whistle-blower exposed some major security risks within the company, and we have yet to learn if those issues have been addressed by Musk and his team since taking over.
“When a brand takes on a new endeavour, it is essential to have the consumer trust the process, and any breach, minor or major, can spell doom in the payment space. I sincerely hope Twitter is focusing on security infrastructure, which should be the starting point for any company. As long as that is top of mind, and this isn’t released hastily, it should be a big win. Currently, it is unclear whether or not that is the case, as Twitter is being run like a start-up, which lends itself to a ‘shoot first, ask questions later’ work flow.”
Money, money, money
Gökçe Güven, the CEO and founder of Kalder, a Web3 company, said: “Elon Musk’s plans to integrate payments into the Twitter platform are seemingly driven by a desire for profits and his competitive nature, specifically, position him against Jack Dorsey and Block (formerly Square.) Musk needs to focus on how the integration of payments can benefit creators, not the company’s bottom line. That can be done, and cryptocurrency is a large part of the solution.
“If Twitter were to integrate crypto payments and share a weekly percentage of the circulating native token based on the traction that creators’ content attracts, this could incentivise more participation and creativity on the app. As the current issues surrounding Twitter Blue verification drive users away, this is an important step in user retention and boosting activity on the platform that could see long term benefits for creators and Twitter alike.”
A step in the right direction
Finally, Chase Petrey, chief operating officer, Pi by Paytm, a risk management provider, said: “With Twitter becoming a payments company, it would soon look like a Facebook marketplace with the benefit of making payments on the platform. It is not clear whether they are accepting card payments only or favouring the use of PayPal. This is a step in the right direction making payments easier and bringing marketplaces closer.”
Musk’s History
Ralph Dangelmaier, CEO of payments platform BlueSnap, thinks that Musk’s career history is the key motivator here.
He said: “Recent changes in Twitter’s operations – particularly the subscriptions move and comments about a currency system – signal that something bigger is coming when it comes to payments. Right now, there are plenty of theories as to why Elon is restructuring the company the way he is. While some think it could be politically motivated, I do not believe this is the case. Given his current high-profile ventures, many forget he was one of the co-founders of PayPal; payments tech is at the core of who he is as an entrepreneur.
“When he moved on to develop Tesla, we saw him experiment with the positioning and overall offerings in many ways. I think he’ll take a similar approach when it comes to new innovations with Twitter, including doubling down on payments. Even when subscriptions drop, if you have a play in payments, you’re getting another guaranteed stream of revenue.
“I don’t think Twitter will be the only major software platform exploring global embedded payments in the next year. There is a lot of potential there, especially for firms that have had a few rough quarters. It may be turbulent for the time being, we’ll have to wait and see before drawing any definitive conclusions.”
Polly Jean Harrison