consumer financial protection bureau

This October, many Elon Musk believers are wondering, where is X Payments?

Last year, Musk claimed in a Spaces conversation that he “would be surprised” if it took longer than mid-2024 to roll out the payments feature that he believes is crucial to transforming the social media app formerly known as Twitter into an everything app.

“It would blow my mind if we don’t have that rolled out by the end of next year,” Musk said around this time last year, clarifying that “when I say payments, I actually mean someone’s entire financial life. If it involves money, it’ll be on our platform. Money or securities or whatever. So, it’s not just like ‘send $20 to my friend.’ I’m talking about, like, you won’t need a bank account.”

Echoing Musk as recently as June, X CEO Linda Yaccarino was hyping the US release of X Payments as imminent. But it has been months without another peep from X leadership, and Ars recently confirmed that X took a curious step in April that suggests the payments feature may be delayed indefinitely.

During the Spaces conversation last December with Ark Invest CEO Cathie Wood, Musk discussed X’s bid to secure money transmitter licenses in all 50 states, noting that it would be “irrelevant” to launch X Payments without California and New York licenses.

Since then, X has made a decent amount of progress, picking up money transmitter licenses in 38 states, including a critical license in California.

But approvals in New York were reportedly stalled for months after a New York City law firm, now called Walden Macht Haran & Williams (WMHW), sent an open letter to attorneys general and banking commissioners in all 50 states in September 2023, urging that X be deemed “unfit” for a money transmitter license.

WMHW had filed a lawsuit alleging that Twitter—before Musk acquired it—”acted at the direction of the Kingdom of Saudi Arabia (KSA) in furtherance of KSA’s long-running campaign of transnational repression.”

That campaign led to the murder of Washington Post correspondent Jamal Khashoggi and the “imprisonment of Abdulrahman Al-Sadhan, a human rights worker and anonymous Twitter user, whose confidential user data—leaked by Twitter’s employees—precipitated and enabled this barbarity,” the letter alleged. And when Musk took over the platform, he only deepened the app’s KSA ties further when he “invited KSA to convert its shares in Twitter into a financial stake during his private take-over of the platform,” the letter said.

Rather than grant X money transmitter licenses, WMHW recommended that attorneys general and banking commissioners use X’s money transmitter licenses as an excuse to investigate the allegations and demystify the app’s allegedly dangerous KSA ties.

Apparently, X either did not like the heat or decided to rethink its X Payments strategy, because the New York Department of Financial Services provided new information to Ars this week confirming that X withdrew its money transmitter license in New York in April 2024.

The department also confirmed that X has not since resubmitted the application.

However, WMHW this month voluntarily dismissed its client’s lawsuit against X and declined to comment on whether the open letter seemingly worked to block X Payments’ launch. It seems possible that X may leverage that court win to eventually resubmit its application for a New York license, but Ars could not confirm if X has any plans to resubmit any time soon.

An X spokesperson answered Ars’ request to comment (which rarely happens) but declined to provide an update on any new timeline for X Payments’ launch.

X Payments unlikely to launch without New York

It seems possible that X has gone silent on X Payments because there is no timeline currently.

A global payments expert for tech consultancy Capco, Daniela Hawkins, told Ars that, as an outsider going just off a “gut check,” if X has withdrawn its application from New York—with “New York obviously being such a major metropolitan area… that would seem to be a barrier to entry into the payments market.”

X could launch X Payments without New York and other states, but Hawkins said users might be confused about where they can and cannot send money. Hawkins thinks it’s unlikely that Musk—who co-founded PayPal and has wanted to launch his own payments app since—would roll out X Payments “half-assed.”

Basically, if X pushed through with the launch, users could accept and send funds just like they can using any other payments app, but without licenses in all states, X users could only send money to people located in states where X has licenses. Hawkins said that inconsistency could deter popular use of the payments feature because “it’s too difficult for the consumer to understand.”

“If you roll it out with handcuffs on it, it’s gonna have a bumpy launch,” Hawkins said. “So why would you do that?”

Going that route, X seemingly risks users ditching X to complete payments on apps where every transaction reliably goes through, Hawkins suggested.

“They’re gonna be like, ‘Wait, I don’t know where this Etsy shop is located, I don’t care,” Hawkins said, noting, “that’s just a bad user experience.”

More regulations on payment apps coming

Last year, Hawkins told Ars that X faced an “uphill battle” launching X Payments, partly due to intensifying regulations on the financial services industry that are increasingly pulling payments apps into regulations typically focused on regulating traditional banking services.

Just days ago, the Consumer Financial Protection Bureau (CFPB) issued a final rule requiring banks, credit unions, and online payments services to make it easy and safe for customers to port banking data to a new financial service provider.

The CFPB argues customers need to have control over their data, but Hawkins told Ars that banks considered the controversial rule potentially allowing customers to transfer sensitive data in one click to be a “freaking nightmare.”

Banks warned of fraud risks and privacy concerns about sharing sensitive data with third parties that could profit off that data, possibly heightening risks of data breaches. Compliance isn’t required until 2026, but already the rule is being challenged in court, Hawkins said.

In one way, the new rule could be good for X, Hawkins told Ars, as the app could quickly gain access to valuable financial data if X users did switch from, say, using a bank to managing money through X Payments. Then X wouldn’t have “to go build all this data from scratch” to make X Payments profitable, Hawkins suggested.

But in another way, the rule could put X in “an interesting spot” where the app is required to share its user data with third parties in a way that could potentially have Musk second-guessing whether X would even benefit from becoming a bank in the way that he initially planned. Banks have protested the CFPB rule as allowing third parties to profit off data that they can’t, and Musk’s whole X Payments plan appears to revolve around profiting off users’ financial data.

“If somebody wants to pay with X, now X has to transfer the data to the third party, and they may not want to do that, because obviously, data is power, right?” Hawkins said.

Not a bank

But if Musk is suddenly shy about turning X into a bank, it comes at a time when banks are less likely to partner with social media apps for potentially risky new payment ventures.

Hawkins noted that banks have struggled to roll out new payment capabilities as easily as fintechs can, and that struggle inspired longtime partnerships between banks and tech companies that have recently begun to collapse. On Wednesday, the CFPB ordered Apple and Goldman Sachs to pay more than $89 million over “illegally mishandled transaction disputes.” Now Goldman Sachs is banned from offering new credit cards until it can be trusted to comply with laws. And Wells Fargo recently bowed out of PayPal and Square partnerships, citing compliance costs, The Information reported this week.

For Musk, who has notoriously butted heads with his trust and safety compliance teams at X, working with regulators on launching X Payments might, at this moment, seem less attractive.

“It’s one thing to want to move money on a payments app,” Hawkins told Ars. “It’s another thing to be a bank. Like he’s gonna hate being a bank.”

Earlier this year, the CFPB risked being dismantled after the financial services associations alleged its funding scheme was improper. But shortly after X withdrew from New York, the Supreme Court ruled in May that nothing was amiss with CFPB’s funding, despite Justice Samuel Alito warning in his dissent that SCOTUS’s decision meant the CFPB could “bankroll its own agenda without any congressional control or oversight,” Reuters reported.

In this strained environment, X could potentially overcome all obstacles and become a bank and fill a gap left by banks beginning to be spooked by fintech deals, Hawkins said, insisting that she would never bet against Musk, whose successes are many. But granting money transmitter licenses helps states prevent financial crimes through compliance requirements, and X quietly pulling out of New York earlier this year suggests that X may not be prepared to take on regulatory scrutiny at this current moment.

The last major development regarding X Payments came in August. It didn’t come from X leadership but from an app researcher, Nima Owji, who posted on X that “X Payments is coming soon!” Digging in X’s code, Owji apparently found references to new payments features enabling “transactions, balance, and transfer,” as well as a “Payments” button seemingly ready to be added to X’s bookmarks tab, TechCrunch reported.

But for Musk fans awaiting an official update, X executives’ silence on X Payments has been deafening since June, when Yaccarino forecast the feature would be coming soon, despite knowing that X had withdrawn its application for a money transmitter license from New York.

X continuing to hype the payments service without publicly disclosing the apparent speed bump in New York “doesn’t feel very honest,” Hawkins told Ars.

X still losing users, advertisers

It has been two years since Musk took over Twitter, soon after revealing that he intended to use Twitter’s userbase as the launchpad for an everything app that would be so engaging and useful that it would be the only app that anyone would ever need online.

Market intelligence firm Sensor Tower shared data with Ars showing that, compared to October 2022, when Musk bought Twitter, global daily average users on X were down 28 percent in September 2024.

Sensor Tower attributed part of the recent decline to X’s ban in Brazil driving out users but noted that overall, users “were down significantly compared to the pre-acquisition period,” as now-X “contended with a rise of controversial content and technical issues.”

While the decline in users could hurt Musk’s ambitions to launch a hugely popular payments app nested in X, the spike in offensive content has notably alienated advertisers who traditionally are X’s dominant source of revenue. And in lockstep with X’s decline in users, major brands have continued to shed the social app in 2024, Sensor Tower told Ars.

Last November, ad agencies flagged then-Twitter brand safety concerns, including GroupM marking Twitter “high risk” and Interpublic Group recommending that advertisers pause spending. By the end of last year, Sensor Tower reported that “of the company’s top 100 US advertisers in the days before” Musk purchased the platform, “only 50 were still there as of October 2023.”

The picture is even bleaker as X approaches the end of 2024, Sensor Tower’s data shows, estimating that “72 out of the top 100 spending US advertisers on X from October 2022 have ceased spending on the platform as of September 2024.” Compared to the first half of 2022, prior to Musk’s acquisition, X’s ad revenue from top 100 advertisers during the first half of 2024 was down 68 percent, Sensor Tower estimated.

Since becoming X’s CEO, Yaccarino has appeared most vocal about driving growth in X’s video services, allowing advertisers to avoid toxic content on the app by only running their ads alongside pre-approved creators’ content. In particular, Yaccarino has hyped X’s partnership with the NFL, announcing today on X that the partnership will be expanded.

That NFL partnership has seemingly helped X grow its ad revenue, with Sensor Tower estimating that “four out of the top 10 spending US advertisers on X in September 2024 were tied to sports or sports betting, likely in an attempt to capitalize on heightened consumer interest around the beginning of the NFL season.”

But overall, X’s revenue has not recovered in 2024, with Fidelity recently estimating that X is worth 80 percent less than when Musk bought the app, CNN reported.

Instead of working with advertisers, Musk went on the attack, suing the World Federation of Advertisers in August over what he calls an “illegal boycott” of X. But X’s spokesperson, Michael Abboud, linked Ars to an X post suggesting that X has held discussions with big brands about a brand safety solution.

“X is pleased to have reached an agreement with Unilever and to continue our partnership with them on the platform,” X’s post said. “Today’s news is the first part of the ecosystem-wide solution and we look forward to more resolution across the industry.”

Unilever did not respond to Ars’ request to comment on X’s proposed solution.

Musk’s strategy for monetizing X has always been to reduce reliance on advertising, but his everything app pursuit does not seem to be coming together as quickly as planned to make up for lost ad revenue. He initially projected that it would take three to five years to roll out all the features turning X into an everything app. But two years in, launching the core product experts say is critical to the success of everything apps like WeChat—X Payments—seems to be the major obstacle that Musk faces to manage the app without relying nearly entirely on advertisers’ meddling ideas regarding brand safety.

Hawkins said that Musk perhaps did not make a “great bet” when buying Twitter as the foundation of his everything app.

X “has continued to trend down in terms of profitability and users, and I’m sure he’s considering X Payments to be maybe a Hail Mary to try to pull X back into the black,” Hawkins said.

But by trying to disrupt the financial industry, Musk perhaps rashly “picked a highly regulated capability to bet the farm on,” Hawkins suggested.

As it stands now, it’s currently unclear when or if X Payments will launch, as the feed on the X account for Payments remains pointedly blank and Musk has not indicated whether X Payments can possibly launch without New York.

“I think it’s very telling he pulled out his application from New York, when he had even said in the media, there’s no point in doing this if I don’t have New York,” Hawkins said.