Dive Brief:

• X, formerly known as Twitter, received money transmitter licenses from the states of Illinois and New Mexico on March 20, bringing the company’s total up to 23.
• The licenses were granted to X Payments LLC, a subsidiary of the San Francisco-based social media company. They are among nine licenses granted this year to X, according to a list on the Nationwide Multistate Licensing System.
• The two licenses move X closer to owner Elon Musk’s stated goal of launching a nationwide payments feature in the social media platform by mid-year. To achieve that goal the company will need to receive such licenses in all 50 states.

Dive Insight:

Shortly after Twitter was purchased by Elon Musk in 2022, the company applied for money transmitter licenses in every U.S. state and territory in a bid to allow users to send and receive money nationwide through its app. The social media platform received its first state licenses in June of last year, according to the NMLS database.

Even if X receives all of the licenses, the company will face a market full of incumbent payments players, according to marketing research firm AFM Consulting Partners Principal Aaron McPherson. In the past, McPherson worked for payments company FIS and Javelin Strategy & Research.

“There's just a lot of competition,” McPherson said in an interview, pointing out that payments giant PayPal, which Musk co-founded, was one of the first in the space. And PayPal-owned peer-to-peer payments app Venmo was the first to incorporate a social media aspect he said.

X would face challenges similar to those faced by social network company Meta, which has tried and failed to launch its own payments features, according to McPherson. “It’s difficult to create a new payment system if you don’t have what I call market permission, which is that people associate you in some way with their financial activity,” he said.

Instead of trying to build a payments feature from scratch, McPherson said X would be better off partnering with an existing payments app like Block-owned Cash App, to take advantage of an established network, fraud controls and user verifications.

“You would integrate Cash App into Twitter, and then people who had a Cash App account now link it to their Twitter profile and use it on Twitter. And so Cash App takes care of all the fraud and they've already done your [know your customer] check,” McPherson said.

McPherson does expect X to launch its payments feature this year, “but I think usage will be very low,” he said. 

Christopher Slaby, public information officer for the Illinois Department of Financial and Professional Regulation, confirmed in an email that X had indeed received a license from the state. The New Mexico Regulation and Licensing Department did not immediately respond to requests to confirm that it had granted X a license.

X responded to questions about its money transmitter licenses and payments feature plans with an automated email that said, “Busy now, please check back later.”