We might be banking on X sooner than we think.
X, formerly known as Twitter, managed to successfully obtain a money transmitter license in ten U.S. states, and revealed plans to expand into more states and even other countries. Soon we may be using X to trade securities and cryptocurrencies, or even own an X credit card.
This is all part of Elon Musk’s plans to turn X into a “super app” similar to China’s WeChat, According to Musk, X’s financial services should be available as soon as the end of 2024. But what do his plans to turn X into the western equivalent of WeChat mean for the future of X and its chances of becoming a public company again?
Becoming an “Everything App”
X was granted a money transmitter license by Alabama, Arizona, Colorado, Georgia, Iowa, Kansas, Montana, Nebraska, Nevada, and Wyoming. While the company plans to expand across the US and beyond, this is no doubt the first step to becoming a super app. After all, cash rules everything around us.
With this license X’s users can send and receive money through the app, but X is is expected to branch into other financial services such as loans, savings, and investments too. It also opens the door for more integration between X and cryptocurrencies.
Elon Musk and Jack Dorsey are both well-known Bitcoin advocates and have invested in several crypto-related projects over the years. In November 2023, Dorsey led a $6.2 million funding round for OCEAN, a decentralized Bitcoin mining pool project. As for Elon Musk, in 2021 he invested $1.5 billion in Bitcoin and has since hinted that X may let users receive tips or pay for subscriptions with Bitcoin.
In August, X acquired a Rhode Island Currency Transmitter License which allows it to store, transfer or exchange digital assets within its platform. Since it already has this license in place, the platform could expand into crypto services very soon.
The Western WeChat
When Elon Musk acquired Twitter for $44 billion, it seemed obvious what direction he’d be taking the app.
Creating a super app like China’s WeChat would transform Twitter from the world’s town square into a the West’s one stop shop for shopping, entertainment, communication, news, and banking. WeChat boasts 1.3 billion users because of its interconnectedness to everything and as of 2023, there were approximately 556 million active monthly users on X. Upgrading X could bring new users to the platform as well as new revenue streams – something Elon Musk is likely eager to do after the hit to advertiser spending.
Musk has commented before about how there is no Western equivalent to WeChat, and since there is a gap in the market, X could seize the opportunity to expand. If WeChat is the inspiration for this expansion, then its important to understand how this super app actually functions.
WeChat was launched in 2011 by Tencent and has grown rapdily since then. While its primarily a messaging app like WhatsApp, it contains “mini programs” which let users access handy features from 3rd-parties like photo filters, translators, cabs, payment services, and more. Through its network of mini programs, this super app emerged – combining all the features of Uber, Amazon, and Tinder into one place.
At the heart of WeChat’s effectiveness is “WeChat Pay”. This simple digital wallet has transformed transactions in China for everything from online shopping to buying groceries. Musk is not stranger to the importance of cashless transactions thanks to PayPal and in some ways WeChat has overcome obstables that PayPal faced like registration.
By integrating these financial features as soon as the end of the year, X could become the centerpiece for people’s interactions. According to Musk, users won’t even need a bank account when X launches its financial services.
With users’ entire financial life on the platform, X will continue to expand its social features as well. WeChat also has a social feature called “Moments” which acts a lot like X. This social feed allows users to post images, text, and short videos as well as share articles and music.
Once the financial aspect is in place and the social feature running effectively, the next step may be adding in shopping, transportation, and networking features as well.
Does the West Need a Super App?
As cool as WeChat sounds, its not clear whether the rest of the world is ready for a super app takeover. For one thing, the App Store has a corner on this market and Musk would need to battle it out with Apple to shake up the way users have been using apps since 2008.
Not to mention WeChat’s integration with everything in a user’s daily life makes it particularly susceptable to government inteference. While the CCP operates very differently from most Western governemnts, it is a risk that may make users’ reticient to rely on one app for all their daily needs.
Other obstacles include Western regulations regarding competition. China’s policies are notably different in this regard and could affect X’s ability to truly become an everything app since it will not be able to block out rival platforms.
Besides these challenges, introducing a super app in the West may not attract the same audience as in China due to differences in daily life and culture. While super apps have taken off in Indonesia with Gojek, Grab in Singapore, and PayTM in India, that hasn’t been the case in the USA. Widespread adoption of smartphones in these Asian countries have helped spur the the development of super apps which often do not have a desktop equivalent.
US consumers are not used to using one app for everything and when tech companies like Meta and Snap have experiemented with adding new features like games and payments systems, the response was lackluster. This hints at what could be a wider problem for X on its journey to becoming a super app. Just because Elon Musk adds additional features to the app does not mean that existing or new users will be receptive to it.
X’s Valuation
But the motivation behind X’s transformation into a super app may just be money.
It appears that X’s valuation has sunk 55% from its purchase price of $44 billion. In October 2023, employees were given equity in the company at a valuation of $19 billion, or $45 per share as determined by the Board of Directors.
One of Musk’s biggest investors, Fidelity, which put $300 million into Musk’s $44 billion takeover of Twitter a year ago, thinks the company is about 71.5% less valuable now, implying a valuation of just $12.6 billion.
Its possible that Elon Musk’s interest in transforming X into a super app could stem from his desire to bring new revenue to the company so that he can recoup some of his $44 billion investment.
Can a Super App Work Outside China?
It’s important to note that WeChat took off in China because of the unique internet landscape there. Many American online services such as Twitter and Google are blocked which allowed a super app like WeChat to grow.
Therefore, creating an everything app in the US or Europe may be a lot more challenging. Especially when it comes to the online financial services area, which is extremely fragmented in the U.S. with no single company dominating the space.
As for other areas, competition is also fierce. In order for X to truly become an everything app, it needs to compete with YouTube, LinkedIn, FaceTime, dating apps, and other financial services.
However, the process of turning Twitter into X has been chaotic so far, the company’s biggest advertisers have mostly fled the platform contributing to its declining valuation. But, Musk sent a clear message to advertisers: He doesn’t need them.
Despite everything, Musk remains very optimistic. In a meeting with X’s CEO Linda Yaccarino and X employees last year he said, “I think this is the fastest rate of innovation maybe ever for any internet company.” True to form, Elon Musk is not afraid to move fast and break things to achieve his goal.
X & Financial Services
Setting aside Elon Musk’s plans to make a super app, X’s entrance into financial services is a bullish sign. The app has approximately 556 million active users, compared to PayPal’s 431 million. This move puts X in a position to become an app that doesn’t rely on advertisers to survive.
People are also paying for X’s premium subscriptions. As of April 2023, it was reported that there were around 640,000 X Premium subscribers. Given the integration between X Premium and Grok AI, the next logical step might be to tie its financial services to the subscription as well.
What’s Next for X?
While this transition towards financial services is promising, it’s important to note that X isn’t the only social media platform moving into Fintech. For example, Facebook launched its own digital currency, Diem, and its payment service, Novi. Snapchat has also introduced a feature that allows users to send money to each other using Venmo.
This means that X is not necessarily unique in its latest pursuit, but these social media apps may lack the vision and expertise that Elon Musk brings to the table. His experience as a co-founder of PayPal after Confinity’s merger with Musk’s X.com should not be overlooked.
Right now he is on the cutting edge of artificial intelligence, and his vision to “copy WeChat” could be what sets X apart in the race to build the West’s first super app.
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