Twitter Payments
Framework for monetizing payments on the world’s largest microblogging network.
A friend asked me a question the other day: ‘If Twitter were to monetize itself using payments, what would be the natural method of going forward?’
Interesting question. One that I am sure a lot of people So here’s my take on that.
Twitter is a vast platform. It has the ability to send micro messages, which is fantastic; it has Spaces where you can host or join live audio conversations and discussions. The platform is used by hundreds of millions of people a day.
I think it’s only natural that Twitter will look at P2P payments (person-to-person payments) or Twitter account-to-Twitter account payments on the platform as time progresses. I think it will be the next big thing.
Fending off Competition
Twitter is in a tight race with many incumbents. The prominent ones are Facebook, WhatsApp, Instagram, Youtube, and TikTok. There is the occasional threat from blockchain-based decentralized platforms like Mastadon, etc., but they have yet to be a noticeable blip on the social media radar.
Tipping on Social Media
Circa 2005, Second Life had something called a tip jar where you’d be able to tip other users and their avatars. For instance, if there was an avatar in a bar and they were serving you drinks, you could tip them by just pointing at the tip jar and putting some money in it.
To tip within Second Life, you had to buy Linden Dollars (or L$ as they were denoted), the currency used in Second Life. Tipping became so common in Second Life that it became a way of appreciating other people. Tipping is how you were rewarded if you took a taxi ride or someone did some construction for you or sold you some skins for your avatar.
For example, when it launched, Quora had something called Quora Credits. You earned Quora credits for every upvote you got, which was the currency within the Quora system. On Reddit, you have Reddit coins, and those can be purchased and gifted to others users for their content. You can give gold, silver, and many other coins to show each other your appreciation.
Introducing Twitter Micro Payments
Today, on Twitter, you can like or retweet a tweet at best.
But what if someone’s putting out a valuable content thread? You and I should be able to tip them on what we think is good content.
I should be able to give them 20 cents or 50 cents or $. The goal is that Twitter should look at small value payments or micropayments.
Micropayment could be as small as a 10th of a cent and as high as $10, $20, or even $50 at maximum. With this, Twitter can start an ecosystem where content, information, or opinion monetization can start. You would have the ability to tip other Twitter users. For example, someone who publishes a nice thread through which you’ve learned. Whether you are based in Tanzania, Guatemala, or Vietnam, you could send the equivalent of maybe 1/10th of a cent or 1/20th of a cent, or 1/5th of a cent to the person you’re tipping.
Twitter does have a tipping/monetization program, but it is super clunky. It only works with Bitcoin or Ethereum; all it does is copy the wallet address and expect you to make the payment outside the network.
How Would Micro-Payments Work in the Twitter Ecosystem?
So, how would it work? Twitter would first need to get licenses in certain jurisdictions, the United States, Canada, the EU (the EEA), the UK, Australia, New Zealand, Singapore, Hong Kong, Japan, South Korea, the GCC, etc.
In my opinion, Twitter should start with Fiat, not crypto. Why? Because it is the most straightforward and lowest-hanging fruit with the least amount of objections in terms of licensing, regulations, etc.
Some pundits are saying Twitter should introduce DOGE in their payments ecosystem. I disagree with that because the regulatory and compliance hurdles are immense when you introduce cryptocurrency, especially on the first go, and that too on one of the world’s largest social media systems (Remember what happened to Facebook and their Libra project?).
Why would you want to skip eight steps, go for crypto immediately, and invite unwanted scrutiny?
Go the Fiat route. It’s already there; it is what everyone understands; it transcends all boundaries, is compliant, and, most importantly, is easy to implement. You want to start with the simplest, the lowest-hanging fruit that would cause the least amount of objection, which in this case would be the Fiat.
It’s my first recommended step. I think Twitter would and should introduce small value and micropayments in their ecosystem.
The next step would be to onboard users in the payment ecosystem. For example, how do you get a customer on board in the United States? Well, if you have a Twitter account, you can verify it through a blue tick. A blue tick or a verified account means you’ve been KYC’ed based on your bank account that is also in your name, you’ve provided some form of identification, etc. You can use that same KYC’ed account, debit card, or bank account to load funds onto the Twitter Wallet.
So now, every verified Twitter account also becomes a Twitter wallet, and based on the amount of KYC information you supplied, that is the limit of your wallet.
Now that you have already been KYC’ed by the banking institution with which you have an account, Twitter is trusting the system that the KYC’ed account as used by a Visa, MasterCard, or your bank account is good enough for themselves to be able to provide you and a wallet on their system.
This can be done in the US, the EEA, the UK, and other countries that can also follow suit. For example, if you’re a user from Greece. You could sign up with Twitter Europe, open an account, and use a Greece-issued bank card to load funds with a limit. The limits could be in slabs. The 90-day limit could be $100, the 30-day limit could be $25, the 60-day limit could be $50, and so on and so forth. This allows Twitter to control the amount of money flowing through KYC’ed bank accounts and debit cards into their payment ecosystem, keeping them safe from terrorism financing and money laundering threats.
Content creators will suddenly have a new revenue stream in all shapes or forms that they have not seen before.
They will not have to rely on third-party payment systems or offload the payment mechanics outside the Twitter ecosystem. It’ll be natively built-in. You can send money to any Twitter account you wish.
Regarding the cost of moving funds from, let’s say, Twitter account A to Twitter account B, it’s simply an internal transfer, a simple ledger entry. There’s no bank involved as such, it’s just a balance entry, a record of truth entry. So as far as Twitter itself is concerned, the balances move from Pat to John, or from Mary to Ali, and so forth. So this is a huge, huge benefit because it brings a lot of revenue that will stay in the Twitter ecosystem. And I think this would be the right approach.
With additional client balances and the sheer size of Twitter, it can eventually offer other financial services. Think of a Twitter-branded VISA/Mastercard being able to issue virtual cards, etc.
Elon Musk is looking in the right direction regarding the platform's monetization. Let's see how it pans out in the coming months.
In my opinion, this would be the most natural progression because it would allow, for the first time, a very large-scale social media presence on the Internet, which they already do but with the added functionality of payments.
Faisal Khan, CEO of Faisal Khan LLC. Please find out more about our services for Money, Banking, Payments, Licensing, and Cryptocurrency on our website.
