X prepares its own payment service

Social network X, formerly Twitter, is reportedly about to launch a payment service to enable its users to store and transfer money in addition to communicating. The aim is as much to transform the social network into a multifunctional application as to overcome the financial challenges posed by declining advertising revenues. X is looking to diversify its revenue streams and enhance the user experience by integrating financial services.

FACTS

• Social network X is planning to launch a new payments service that will transform the social network into a broader service platform, taking the form of a “Payments” button integrated into the navigation bar.
• This service was originally scheduled to launch in mid-2024, according to Elon Musk's objectives. It should enable users to store and transfer money.
• Recently, X Payments, a subsidiary of X, was able to obtain a new license in the state of North Dakota, bringing the number of US states covered by its services to 33.

CHALLENGES

• Reducing advertising dependency: X is seeking to diversify its revenue sources to offset recent advertising losses. The introduction of a payments service could offer a new revenue stream through transaction fees.
• Boosting innovation and loyalty: By integrating financial services, X aims to meet users' growing need for all-in-one solutions, which could strengthen loyalty and enhance the user experience.
• Ensuring compliance for expansion: Securing and obtaining the necessary licenses represents an obstacle to rolling out the service, including, subsequently, internationally.

MARKET PERSPECTIVE

• The market for digital payments and social platforms has undergone a profound transformation in recent years. The integration of financial services into social applications is booming, driven by companies seeking to offer complete solutions for transactions and money management.
• By offering its own payment service, X would be defending an ever more integrated approach to services, and building a solution closer to the super-app than to the social network.
• This convergence between social networks and financial services has had its precedents, however. Facebook launched a unified payment system as early as 2019, as did Instagram, which has also enabled purchases to be made via Direct Messages since 2022.