Elon Musk’s social media company X, formerly known as Twitter, has teamed with card network giant Visa in its quest to launch a digital payments tool, according to a post on the site by its CEO.

In her post on X Tuesday, the company’s chief executive, Linda Yaccarino called the X Money account an “everything app” that will launch later this year. The digital wallet will provide for instant funding to an X digital wallet via the card network’s cross-border payments rail called Visa Direct as well as peer-to-peer payments using a debit card, she said.

It’s the “first of many big announcements about X Money this year,” Yaccarino said in the post.

Musk, a billionaire who has become a confidante and adviser to President Donald Trump, has been on a quest to develop X’s payment tool since purchasing Twitter in 2022 and renaming it X. As part of that campaign, X has been collecting money transmitter licenses, state by state, to build X’s own nationwide network.

In a separate post Tuesday on X, Visa acknowledged the new alliance. “Visa Direct will make it possible for US X Money Account users to fund and transfer money in real-time with their debit card,” the post from Visa said in response to Yaccarino’s post. When asked for comment, a spokesperson for Visa referred to the company’s post.

Musk appointed Yaccarino, a former NBCUniversal executive, to lead Twitter in May 2023. Around the same time, X began accumulating state money transfer licenses under the name Twitter Payments, beginning with Arizona, Michigan, Missouri and New Hampshire. The platform now about 40 state licenses, according to the Nationwide Multistate Licensing System (NMLS). 

Musk has experience in the payments industry as a co-founder of the online bank X.com in 1999 before it merged with another business to become PayPal.

Musk efforts to create the X wallet

He was making plans for the X payments feature even before the Twitter deal closed. In 2022, he said he could create a payments business that would contribute $1.3 billion to the company within six years, according to an October 2022 report from The New York Times. The owner of SpaceX and the largest shareholder of electric car-maker Tesla also told Twitter’s staff that he had plans to “populate a balance for every verified Twitter user,” according to a November 2022 report from media outlet The Verge.

“Give them some amount of money, like ten bucks or something, that they can send anywhere in the system,” he said, according to a transcript posted by the Verge. “We need money transfer licenses for that, which we’ve applied for.”

Musk’s businesses stand to benefit from his connections to the White House. He became a significant donor to Trump, delivering as much as a quarter of a billion dollars to the then candidate’s campaign and related political action committees last year.

Now, Musk is heading up an advisory group that will make recommendations to the Trump administration for federal government cost cuts and government efficiency moves.

Why it’s good for Visa

Meanwhile, Visa has been aiming to offer more services, beyond its card services sweet spot, and specifically to strengthen its Visa Direct offering for moving money through bank accounts. In a press release last month, it touted its ability to use that rail to let users transfer funds in less than a minute by way of a debit card.

Visa Direct has also been the means by which the card network is seeking to become a bigger player in the international remittances arena, letting people send money to family and friends in other countries.

It may be handy for Visa to have a new connection to the White House. It has been trying to fend off increased scrutiny from the federal government as well as some congressional members over the past several years. 

Last September, the Justice Department sued Visa in a civil antitrust lawsuit over its debit card practices in federal court. The department alleged the card network’s anticompetitive activities in the debit card market stifled competition from companies pitching newer digital payment tools. Prosecutors argued that those Visa debit card moves also injured U.S. consumers and merchants because it was able to charge exorbitant fees. 

The company has also faced harsh criticism on Capitol Hill where Democrat Dick Durbin and Republican Roger Marshall teamed up in 2022 to sponsor the Credit Card Competition Act proposal, seeking to foster more competition for Visa and its no. 2 rival, Mastercard. During a hearing on that issue last month, even Republicans castigated a Visa executive over the company’s escalating interchange fees imposed on merchants. As a senator, now Republican Vice President J.D. Vance was also a sponsor of the legislation.

The competitive digital wallet arena

A lot of digital wallet companies have beat X to the field. PayPal and its Venmo peer-to-peer payments unit have been burnishing digital wallet applications for years, attracting both merchant and consumer users. PayPal now has hundreds of millions of consumer accounts and tens of millions of merchant accounts.

In addition, tech titans Google and Apple have been spooling up their payments plays, expanding to add features that make them more useful to consumers. 

Block’s Cash App has also become a major player, with merchants using the Square service and consumers now able to tap the company’s Afterpay buy now, pay later options.

Still, X is formidable. As of last year, it had about 336 million users worldwide, down from 368 million over the past three years, according to Statistica. And Visa is X’s first digital wallet partner, Yaccarino said. 

It’s a strong one, given Visa is the largest U.S. card network and the second-biggest in the world. That makes an attention-getting difference, said Peter Tapling, a Chicago-based industry consultant who formerly worked for Early Warning Services, the company behind Zelle. The move “adds some credibility” to X’s wallet efforts, he said by email.

For Visa, it’s one more way in which the company can insert its hand into the payments flow for some sort of a payout. “Visa wants to be in the middle of any payment anywhere,” Tapling said.

Monetizing the X payments play

Visa may ultimately serve as more than just a network for X as the social media company seeks to monetize the new wallet. It remains a question as to how X will earn income, whether from merchant or consumer fees. The network could provide the functionality that merchants expect for processing transactions. 

Musk “might be thinking further down the road,” said Jed Rice, a former PayPal executive. “The challenge for every peer-to-peer network is to figure out how to monetize” the service, he said.

To make money, there has to be a framework for refunds, chargebacks, fraud monitoring and other features, Rice explained. “Anytime you start moving from a peer-to-peer network to a commercial payment network where you’re going to charge fees, merchants who pay those fees will expect a certain level of functionality,” he said.

“There’s a lot here that can go wrong and that might be why he’s thinking ‘I need to ride Visa’s rails,’” Rice said.