Elon Musk Rushes to Debut X Payments Documents Show
Hey Payments Fanatic!
Recent state license applications have unveiled new insights into Elon Musk's ambitious plans for X, previously known as Twitter. His vision aims to evolve the platform into an "everything app" by integrating a comprehensive payments network into its existing social media framework.
Expanding Beyond Social Networking
While the specifics of this initiative have been somewhat elusive, newly obtained documents submitted to state regulators reveal the depth of X's strategy. These documents, which were not publicly available until now, outline a feature set reminiscent of Venmo. Users will be able to store money within their X accounts, make payments to other users or businesses, and even purchase goods and services in physical stores.
Diversifying Revenue Streams
Elon Musk has frequently emphasized the need for X to diversify its revenue streams beyond traditional advertising, which has historically accounted for over 90% of the company’s income. He has also boldly claimed that X has the potential to become the largest financial institution globally. However, the documents indicate that X does not intend to impose significant fees for its payment services. Instead, the company views this offering as a means to enhance user engagement and participation on the platform.
Licensing and Regulatory Landscape
The recent disclosures come from over 350 pages of documents and emails pertaining to money transmitter licenses that X has filed in 11 states. Currently, X Payments, a subsidiary of X, has secured money transmitter licenses in 28 states, as noted on the company's website. The goal is to obtain licenses in all 50 states and to roll out the payment services nationwide by the end of the year. Initially, X aimed to launch these features internationally by early 2024, but regulatory challenges have caused delays.
Strategic Partnerships
To facilitate its payment operations, X has formed partnerships with several major payment processors, including Stripe and Adyen. These collaborations are expected to support credit and debit card transactions on the platform. According to the documents, it is anticipated that X Payments will continue to work closely with these partners as the service expands.
Conclusion
Elon Musk’s vision for X is set to redefine the platform by integrating robust payment features, potentially positioning it as a significant player in the financial services sector. As X continues to navigate regulatory landscapes and expand its licensing, the anticipated launch of its payment services could mark a transformative step in achieving Musk’s goal of creating an all-encompassing app.
What do you think? Will X become the super app of the West?
Cheers,
INSIGHTS
🇺🇸 Disputes over Chargebacks in the US are expected to rise abover $𝟭𝟱 𝗯𝗶𝗹𝗹𝗶𝗼𝗻 by 2026 🤯
Disputes over credit-card charges, once a measure of last resort, have surged as shoppers learn how easy it is to deploy them.
Last year, consumers disputed about 105 million charges with credit-card issuers in the U.S., worth an estimated $𝟭𝟭 𝗯𝗶𝗹𝗹𝗶𝗼𝗻.
That is up from $7.2 billion in 2019, according to Datos Insights, a finance-industry research firm. The company predicts that figure will rise nearly 40% by 2026.
PAYMENTS NEWS
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🇺🇸 Documents show how Musk’s X plans to become the next Venmo. State license applications give new insight into the company’s plans: A major plank of Elon Musk’s plan for expanding X into an “everything app” has been grafting a payments network onto its main social networking service.
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GOLDEN NUGGET
The Evolution of Real-Time Payments (RTP), it's time Local went Global with new Cross-Border processes👇
The Global Payments Market:
The global payments market has been experiencing significant growth, reaching $2.2 trillion in revenues in 2022, an all-time high with an 11% increase from the previous year.
B2B transactions made up 97% of the ~$156 trillion in cross-border payment flows in 2023, took 2-5 days to settle at an average cost of 6.2%. In Brazil and India, Real Time Payments (RTP) has decreased settlement times to seconds and costs by 50-90%.
When one considers that domestic payments cost anywhere between 30bp and 300bp depending on the payment rails used (ACH or card), and international payments costs (excluding foreign exchange fees) range from 65bp to 450bp, there is a significant profit pool to be disrupted 🤯
Real Time Payments (RTP):
Real-time payments are account-to-account (A2A) financial transactions that are initiated, cleared, and settled usually within seconds. These transactions run on RTP networks designed by central and commercial banks to offer faster and cheaper payment solutions, bypassing traditional payment infrastructure like cash, checks, ACH, wire transfers, and cards.
Benefits of Real-Time Payments:
🔸 Lower Costs
🔸 Increased Security
🔸 Reduced Fraud Risk
🔸 Greater Financial Visibility
🔸 Improved Cash Flow Management
🔸 Value-Added Services
How Real-Time Payments (RTP) Work in a Cross-Border Transaction (i.e. U.S. -> Brazil) 👇
1️⃣ Company A initiates a payment, sending a message to its Financial Institution via its banking app or online banking platform.
2️⃣ The sender's FI submits a payment message to the FedNow service (ISO20022 messaging format).
3️⃣ FedNow validates the message, verifying it meets the required format specifications.
4️⃣ FedNow sends the payment message to the PIX network
5️⃣ PIX validates the message, verifying it meets the required format specifications
6️⃣ PIX sends the contents of the message to the receiver's FI to seek confirmation that it intends to accept the message.
7️⃣ The receiver's FI sends a positive response to PIX, confirming that it intends to accept the payment
8️⃣ PIX sends the same correspondence to FedNow.
9️⃣ FedNow and PIX will debit and credit the designated master accounts of the sender's and receiver's FI.
🔟Outside of the FedNow/PIX services the receiver's FI credits the receiver's account and sender's FI debits the sender's account.
Real-time payments are set to revolutionize both domestic and cross-border transactions. By providing faster, cheaper, and more secure payment options, RTP networks offer significant advantages over traditional payment methods 🚀
Source: Activant Capital
And I highly recommend following my partner at Connecting the dots in payments... Arthur Bedel 💳 ♻️ for more great updates like this one👌
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