X Withdraws Payment Processor Application in New York
It seems that Elon Muskâs plan to convert X into an âeverything appâ has taken a step back, with the company effectively pausing its plan to roll out payments functionality in the app.
Well, itâs pausing the process by extension. This week, The New York Department of Financial Services confirmed to Ars Technica that X withdrew its application for a money transmitter license in New York back in April, meaning that X isnât currently trying to get full payments licensing in the U.S.
X has been granted payment transmitter licenses in 38 U.S. states, which is the crucial first step to facilitating payments in the app. A payment transmitter license gives the platform permission to facilitate funds transfers, while it would need to gain payment processor licensing as well in order to enable direct shopping in-stream.Â
Full licensing in all U.S. states takes some time to obtain, based on regional application processes. But in January, X confirmed that it did indeed plan to launch peer-to-peer payments this year, while Musk noted in an interview late last year that he would be âsurprised if it takes longer than the middle of [2024]Â to roll out paymentsâ.Â
Musk also remarked in that same interview that obtaining payments licensing would be âirrelevant until California and New York approve us.â X has obtained a license in California, but itâs not currently in the process of seeking the same in New York.
So why the change in approach?
The main hurdle for X in New York appears to be a legal filing, issued in September last year, which questioned whether X has the âgeneral fitness and character to hold such licenses.â Â
The filing alleges that X has âtroubling and deep tiesâ to the Kingdom of Saudi Arabia, due to Saudi Crown Prince Mohammed bin Salman being an investor in Muskâs X project (and and shareholder in Twitter before it). The Kingdom of Saudi Arabia, the filing alleges, has a long history of brutality and repression, which it claims âhas been fueled and enabledâ by the platform itself.
It seems that X has been forced to re-think its payments strategy as a result of this challenge, which has led to it removing its NY application. Thereâs no word as yet on whether X will re-file its application at another stage.
Itâs another blow for the company, which is still working to re-form itself into a new entity, and branch out from Twitterâs original social networking roots.
Payments are core to Muskâs âeverything appâ vision for the platform, stemming from his original plan for a payments/social app that he formulated back in 2000, when he was working at PayPal. Back then, Musk and business partner David Sacks came up with a product roadmap that would transform PayPal into an all-encompassing digital financial platform. But after he left PayPal in 2001, Musk says that they abandoned that plan, and rolled back several key features.
The idea has stuck with him ever since, and he has claimed, several times, that purchasing Twitter is an âaccelerant to Xâ, and reviving his concept for an all-in-one financial and engagement app.
But now, X seems stuck at the first hurdle, while the companyâs staring down a significant loss for the full year.
Really, as with most of Muskâs X plans, the whole endeavor now seems to hinge on the result of the upcoming U.S. election, with Musk going all-in to push for Donald Trump to be re-elected as President. If that happens, it seems likely that Musk will be able to leverage his new political influence to facilitate expanded opportunities for X, while push for more lenient regulatory consideration on several fronts.
Maybe, thatâs where X is currently at. If Trump wins, it can reassess its financial and developmental state, with a view to Muskâs âeverything appâ plan, but if Trump loses, the avenues to getting the business back on track suddenly become a lot less clear.
Either way, right now, it seems that X is not close to providing payments as an option in-stream.
