Twitter’s Potential in the Payments Industry

and Lessons from Facebook’s Missteps

Here is a long thread on Twitter’s recent grant of their first money transmitter license and what I think would be happening.

Twitter’s recent acquisition of a money transmitter license has sparked discussions about its entry into the payments industry.

In this thread, we’ll explore the prospects of Twitter as a payment platform, compare it with other major players like Facebook, Apple, and WhatsApp, and discuss the importance of regulatory approvals for global expansion.

Additionally, we’ll examine the mistakes made by David Marcus, who was involved in Facebook’s failed attempts to launch a payment system.

Background on Tech Giants and Payments:

• Facebook’s misstep: Facebook’s attempt to launch its own currency, Libra, and its complicated approach to payments have hindered its success in the field.
• Microsoft briefly pursued money transmitter licenses but later abandoned the idea.
• Amazon’s payment system is primarily focused on its ecosystem and lacks international peer-to-peer capabilities.
• Apple has its Apple Pay system, but its reach is limited to its ecosystem.
• Samsung and Google also made efforts with Samsung Pay and Google Pay, respectively, but faced various restrictions and licensing issues.

Twitter’s opportunity: With a simpler and more user-friendly approach, Twitter has the potential to thrive as a payment platform.

David Marcus and Facebook’s Mistakes:

• David Marcus’s role: David Marcus, a key figure in Facebook’s payment endeavors, made critical errors in their strategy.
• Overcomplicating the system: Instead of starting with a basic payment system, Marcus and his team attempted to create a complex ecosystem with their own digital currency.
• Unrealistic goals: Facebook envisioned a utopian scenario where multiple currencies and countries would embrace their Libra coin, but this idealistic vision ultimately backfired.

Twitter’s Unique Opportunity:

• A simpler approach: Twitter is expected to offer a straightforward payment system, starting with a Twitter wallet where users can load funds and exchange them for various purposes.
• Potential use cases: Users could pay a small amount for tweets, articles, or specialized content, fostering a vibrant payment ecosystem within the platform.
• While WhatsApp is widely used for communication globally, its foray into payments has not been as successful due to complex strategies and mistakes. I really hope Twitter doesn’t make the same mistakes as WhatsApp did.

Twitter’s Progressive Approach:

• Gradual adoption: Twitter is unlikely to immediately embrace cryptocurrencies, opting for a step-by-step implementation strategy.
• Peer-to-peer transactions: The platform will likely enable users to exchange balances and facilitate direct transactions among Twitter users.

Importance of Global Expansion:

• Regulatory approvals: Obtaining approval in the United States is just the first step for Twitter; filing for licenses in other countries is essential for global expansion.
• Beyond an America-centric system: Filing in countries worldwide, such as Canada, the UK, EU, Singapore, Hong Kong, UAE, South Africa, Brazil, and Argentina, will pave the way for Twitter’s success on an international scale.

Potential Impact and Competition:

• Twitter’s opportunity: If executed effectively, Twitter could become a dominant player in the payments industry.
• The danger for Facebook: Should Twitter stumble, it could provide an opening for Facebook’s WhatsApp to assert its dominance.
• Simplified payments approach: While other contenders like specific crypto players may arise, the key lies in starting with a streamlined regulated payment system rather than overly complex solutions.

Twitter’s acquisition of a money transmitter license presents an exciting opportunity for the company to enter the payments industry. A lot of folks are excited by this. By learning from Facebook’s mistakes, especially those associated with David Marcus, Twitter can focus on a simplified payment system that caters to user needs. Global expansion and regulatory compliance will be crucial for Twitter’s success. It remains to be seen how Twitter will navigate these challenges and shape the future of payments while avoiding the pitfalls encountered by its competitors.

The true potential of Twitter lies in its ability to facilitate international transactions. It has the capability to enable small-value transfers to your Twitter wallets from anywhere in the world.

It’s crucial to recognize that there are over 220 countries and territories worldwide, and connecting them is not just about creating a platform for sharing content but also about enabling seamless payments. Many, including competitors, are closely observing what steps Elon Musk takes next in this regard.

Faisal Khan, CEO of Faisal Khan LLC. Please find out more about our services for Money, Banking, Payments, Licensing, and Cryptocurrency on our website.