Why should X replace bank accounts? What does Musk have?

Why should X replace traditional bank accounts? What advantages does Musk offer?

The Chairman of Company X (formerly Twitter), Elon Musk, mentioned WeChat again during an all-staff meeting on October 26th. He reiterated his desire to create a super app that combines multiple functionalities. It has been exactly one year since he officially acquired Twitter.

Musk emphasized that Twitter will be launching the latest payment feature and claimed that it will allow people to “not need a bank account.” The related financial services will be rolled out by the end of 2024.

Although Musk outlined a blueprint for Twitter to become a super app comparable to WeChat, it still faces several challenges. As a content sharing platform, Twitter’s DNA differs from social communication apps with payment methods, and it lacks high-frequency payment scenes like e-commerce.

One apparent difference from other social platforms is that Twitter, as a global social platform, has a wide range of users with encrypted assets and embodies Web3 culture. Musk himself is a fan of Dogecoin. If Twitter can incorporate Web3 payment methods that reduce transaction frictions, it will have the potential to become a cross-border payment tool.

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Twitter’s missing payment scenarios

“We are rapidly transforming the previous version of Twitter 1.0 into an ‘all-in-one’ application… People can complete payments, send messages, watch videos, make calls, and do anything they like, all conveniently in one place.” Musk reiterated his high expectations for Company X at the all-staff meeting.

The concept of this “all-in-one” application is not unfamiliar to domestic users. WeChat and Alipay are representatives of such super apps, especially WeChat, which solves various life and work-related scenarios for Chinese people, such as communication, payment, and entertainment, all in one platform, leaving foreign internet companies in the dust.

During the meeting, Musk also praised WeChat once again. He said, “In China, they have achieved this concept to some extent, that is WeChat… but that doesn’t mean we just want to copy WeChat. We can actually create a product that surpasses WeChat in the end. We can do some incredible things.”

When it comes to payment scenarios, Musk even expressed that X will replace bank accounts, “I’m talking about the entire financial life of individuals. If it involves money, it will be on our platform—whether it’s money, securities, or anything else. This is not just about transferring $20 to a friend. I mean, you no longer need a bank account.” He revealed that X will launch related services before the end of next year.

In fact, foreign tech giants, including Meta, Uber, and Snapchat, have all tried to create super apps but ultimately failed to sustain them.

In 2020, Snapchat collaborated with Square to launch Snapcash, providing users with mobile payment services. Later, Snapchat allowed third-party integrations and introduced Minis features, allowing users to engage in activities like gaming within the app.

Facebook, the predecessor of Meta, introduced payment functionality in its messaging software Messenger and added e-commerce functionality to its image and video sharing platform Instagram to create more payment scenarios.

Facebook has also attempted to transform WhatsApp into a super app in markets such as India.

However, for American users, it has become a habit to use different apps to complete different services. Therefore, it is not easy to do what WeChat can do in overseas markets.

Some industry analysts point out that successful payment wallets are usually built on core high-frequency payment scenarios. WeChat has built its own payment foundation through peer-to-peer transactions, allowing users to directly send money to contacts through the app. Alipay relies on Alibaba’s e-commerce platforms such as Taobao and Tmall, forming a widely accepted payment ecosystem for both merchants and consumers.

These two platforms also attach importance to the development of offline face-to-face payments. When WeChat and Alipay became prevalent, Western payment solutions such as Google Pay and Apple Pay had not yet been rolled out in China.

In comparison, Twitter faces a lack of payment scenarios. Despite Musk’s ambition, without e-commerce, live-streaming sales, and other scenarios, there are already mature online payment solutions in different countries, so Twitter will face significant challenges in developing in the payment field.

Musk must create a core payment scenario within the app. Now it appears that Twitter is attempting to do this through X Blue paid subscriptions (formerly Twitter Blue), allowing users to pay for exclusive content and creators to earn dividends through an ad revenue-sharing model, among other methods.

However, the usage rate of these paid features has been relatively low. It is reported that only about 640,000 people registered for the Blue service in the first half of the year, and the current churn rate is extremely high, with over half of the early Blue subscribers canceling their subscriptions.

Whether a large number of X Blue users can be convinced to start using social media apps as payment tools is a major question.

In addition, in Western markets, users are accustomed to finding the services they need in Apple and Google’s app stores. This service system has become deeply ingrained and is extremely difficult to change.

Can Web3 be a breakthrough?

However, when discussing innovations in the payment field, we cannot ignore Twitter’s apparent advantages in cryptocurrency culture and the Web3 domain.

Under former CEO Jack Dorsey’s leadership, Twitter has actually made good progress in the Web3 domain. The launched Twitter SLianGuaice and NFT products are manifestations of this trend. These efforts may be one of the important factors for Musk’s acquisition of Twitter. Compared to Google, Amazon, and Meta’s explorations in the NFT and cryptocurrency fields, Twitter is clearly more forward-looking.

After Musk took over, Twitter was renamed X, which is interesting because X.com was the predecessor of the payment heavyweight LianGuaiyLianGuail. This is not a coincidence. In 1999, Musk invested $12 million with former CEO of Intuit, Bill Harris, to co-found X.com, which later made significant achievements in Web3. Recently, it just released the US dollar stablecoin PYUSD.

This year, Twitter has significantly accelerated its pace in the financial field, including payments.

In late August, X obtained a cryptocurrency payment license issued by the state of Rhode Island in the United States. This means that it can provide storage, payment, and trading services for cryptocurrencies to some users. Prior to this, Twitter had already obtained fiat payment licenses in six states in the US.

On April 13th, X also launched the Cashtags feature, which allows users to directly view stock quotes on the platform. The data for this feature is provided by TradingView.

At the same time, Twitter has also partnered with online broker eToro. eToro is an investment trading platform known for its copy trading feature, where investors can track and replicate the trades of top traders on the platform, including stocks, funds, and 14 cryptocurrencies such as Bitcoin and Ethereum.

From a more macro perspective, X’s active performance in the cryptocurrency and Web3 field is not unrelated to Musk’s personal understanding of this field. This may be X’s breakthrough in becoming a super app.

According to an investor document obtained by The New York Times, Musk predicts that by 2028, X will generate $1.2 billion in revenue from the payment sector. He also indicated his determination to reduce reliance on advertisers.

Some optimistic analysts believe that Musk’s plan for X can be seen as a reincarnation of Libra. Libra had once provided encrypted wallets for Facebook’s over 1 billion users and planned to issue a stablecoin that could be used globally. However, the plan failed under intense scrutiny from the US Congress. “But Twitter can learn from the lessons and Musk doesn’t have the same political baggage as Mark Zuckerberg,” they say.

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