Elon Musk made his earliest fortune in payments. His fledgling online bank, X.com, merged with Peter Thiel’s Confinity in 2000 to form PayPal. PayPal was then sold to eBay in 2002. In 2023, Musk — the new owner of Twitter — revived the X name in a rebrand of the social media site. In addition to reviving the X brand, Musk reentered the banking and payments game by announcing to his employees that his goal was to have X serve as a one-stop solution for a user’s “entire financial life.”

In a January 2024 blog post, X announced plans to release its first financial product — peer-to-peer (P2P) payments — before the year ends. NMI’s Kate Hampton and Tiffany Johnson recently gave their thoughts on X’s plan to revolutionize how people pay.

A Difficult Task Made Harder by the Time Crunch

Building a P2P payments network and convincing people to entrust their money to it isn’t easy. The United States Federal Reserve first announced the details of its FedNow instant payment rail in 2020. It took three more years before the network was finally ready for use. 

While X may be more agile than the U.S. government, Musk’s 2024 deadline gives his engineers only a year to build X’s P2P capabilities. This doesn’t leave much time to work, considering everything that goes into building, certifying and marketing a payments platform.

“[Building a payments platform] can mean things like deploying new technology, growing existing teams from engineering and product to sales and support, building new muscles to satisfy new regulatory requirements, or thinking through brand positioning and identity to become a company that users can trust with their money,” NMI Chief Strategy Officer Kate Hampton said in a recent conversation with Digital Transactions.

Musk is notorious for pushing his engineering team to extreme lengths. However, that team is already stretched thin after he cut roughly 80% of X’s staff after buying the company.

Favorable Scale Means X Could Beat the Odds

Both Hampton and NMI Chief Product Officer Tiffany Johnson pointed out that, while Musk’s play is bold, X has a significant advantage thanks to its size and existing user base.

Hampton noted that in addition to the maturity and scale of X’s network, the app holds a stickier place in users’ lives. Unlike the banking and financial apps that traditional real-time payments use, most of X’s users interact with the app or website multiple times per day for enjoyment. With convenience and speed topping consumers’ demands in a payment system, baking instant payments into an app they already use is a smart choice.

Focusing on the merchant side, Johnson told Payments Dive that X could benefit merchants even with a limited initial rollout. By leveraging its size and position in the market, X could potentially negotiate lower bulk transaction rates with banks. This would allow X to do two things:

  • Pass along savings to small merchants tired of paying high credit card interchange fees
  • Monetize transactions to generate a new source of revenue

An Inevitable Integration?

It’s uncertain whether the engineers at X will be able to provide an embedded P2P network by the end of 2024. However, it’s worth noting that Musk has famously claimed Tesla’s full self-driving feature was “almost” ready every year since at least 2015. Whether X’s P2P capabilities come online in 2024 or later, the integration of payments into the social media platforms consumers spend so much time on may be inevitable.

For more of Kate Hampton and Tiffany Johnson’s thoughts on X’s foray into the payments space, check out their interviews in Digital Transactions and Payments Dive.

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