X marks the spot

It's official. X (the social media platform previously known as Twitter) is set to enter the payments space. In the waning hours of 2024 X CEO Linda Yaccarino took to the platform to announce the launch of X Payments in 2025.

X Payments, a payments gateway that integrates with the ecommerce platform X-Cart, is the latest move to transform X into an "everything app."

"In 2024, X changed the world. Now YOU are the media!" Yaccarino wrote. She added that "X will connect you in ways never thought possible," and referenced plans for X TV, X Money, Grok, and more. "Buckle up," she added.

The news is not a surprise. The prelude to X Payments dates back to 2010 with the launch of the ecommerce platform X-Cart.

As a payments gateway, X Payments says it will be hyper-focused on security.

More than just a gateway

Yaccarino's reference to X Money seems to signal X owner Elon Musk's desire to get back into the payments space. In 1999, he created a company called X.com, an online bank that soon merged with Confinity, which eventually became PayPal.

Since purchasing Twitter and rebranding it as X, Musk has hinted at using it to compete with peer-to-peer payment apps like PayPal, and its subsidiary Venmo, with X Money. Musk also is big on cryptocurrency, especially Dogecoin, suggesting at times that it could become a payment option on X.

"Elon Musk's long-term goal is to merge social content with payment rails, making X Money an in-feed checkout solution rather than a mere payment gateway," said Richard Crone of Crone Consulting LLC. "Embedding payments directly into social threads can reduce cart abandonment, tying user engagement to actual purchases in a verifiable attribution audit trail."

Obtaining money transmitter licenses

X has been working on obtaining money transmitter licenses on a state-by-state basis. According to the company's website, it has so far garnered licenses in 40 states. Noticeably absent from the list of states is New York. X had filed a money transmitter license application with the New York Department of Financial Services but pulled the application last fall.

Money transmitter licenses are issued on the state level. Money transmitter businesses, however, must abide by certain federal laws such as the Bank Secrecy Act, and consumer disclosure requirements set forth by the Consumer Financial Protection Bureau.

Other states where X Money has yet to be licensed include Delaware, Massachusetts, Washington and Wisconsin.

Yaccarino's post seems to suggest that X will move ahead with X Money without money transmitter licenses from all 50 states.

Questionable ties to Saudi Arabia

According to published reports, the retreat from New York may be tied to an open letter penned in the fall of 2023 by New York law firm Walden Macht & Haran LLP to the attorneys general and banking commissioners in all 50 states, urging "heavy scrutiny" of the company's "general fitness and character to hold such licenses."

At issue are allegations that Twitter acted at the direction of the Kingdom of Saudi Arabia (KSA) "in furtherance of KSA's long-running campaign of transnational repression." Among those allegations, Twitter reportedly approved Saudi requests for information, including "emergency disclosures," to identify political dissidents.

Since his takeover and rebranding of Twitter, Elon Musk invited KSA to convert its shares in Twitter into a financial stake in his private takeover of the X platform, the letter related.

For these and other reasons, the letter argued, the firm "is unfit to hold money transmitter licenses. But regardless of each state's decision on licenses, we urge the Commissioners to use these applications to investigate [Twitter's/X's] prior conduct and its current and other entanglements with KSA." The letter also asked the attorneys general "to collaborate in an orderly but comprehensive investigation" of Twitter's/X's "troubling and deep ties to KSO."

Critical mass exists to compete with Venmo, and more

While X has been short on specifics regarding X Money, Crone suggested X could take a cue from TikTok on that front.

TikTok Shop, launched in late 2023, marries TikTok's entertainment function and ecommerce, connecting brands and merchants with highly engaged customers via social media influencers, based on customers' interests, with purchase functionality embedded in influencers' videos (at the end of each video). Think of it as hyper-personalized advertising with embedded payments.

"X has an opportunity to play that same game," Crone said. "Advertisers crave proof of purchase conversion, which could let X subsidize or even waive payment fees to merchants altogether in exchange for higher advertising and promotional rates."

TikTok is facing a ban in the United States – a casualty of the tech war between the United States and China – unless it is sold by its Chinese owners. President-elect Donald Trump, however, has urged the U.S. Supreme Court to hit the pause button on the law that would force that sale.

Whether you want to upgrade your POS offerings, find a payment gateway partner, bone up on fintech regs or PCI requirements, find an upcoming trade show, read about faster payments, or discover the latest innovations in merchant acquiring, The Green Sheet is the resource for you. Since 1983, we've helped empower and connect payments professionals, starting with the merchant level salespeople who bring tailored payment acceptance and digital commerce tools, along with a host of other business services to merchants across the globe. The Green Sheet Inc. is also a proud affiliate of Bankcard Life, a premier community that provides industry-leading training and resources for payment professionals.

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