X Withdraws Payment Processor Application in New York

It seems that Elon Musk’s plan to convert X into an “everything app” has taken a step back, with the company effectively pausing its plan to roll out payments functionality in the app.

Well, it’s pausing the process by extension. This week, The New York Department of Financial Services confirmed to Ars Technica that X withdrew its application for a money transmitter license in New York back in April, meaning that X isn’t currently trying to get full payments licensing in the U.S.

X has been granted payment transmitter licenses in 38 U.S. states, which is the crucial first step to facilitating payments in the app. A payment transmitter license gives the platform permission to facilitate funds transfers, while it would need to gain payment processor licensing as well in order to enable direct shopping in-stream. 

Full licensing in all U.S. states takes some time to obtain, based on regional application processes. But in January, X confirmed that it did indeed plan to launch peer-to-peer payments this year, while Musk noted in an interview late last year that he would be “surprised if it takes longer than the middle of [2024] to roll out payments.” 

Musk also remarked in that same interview that obtaining payments licensing would be “irrelevant until California and New York approve us.” X has obtained a license in California, but it’s not currently in the process of seeking the same in New York.

So why the change in approach?

The main hurdle for X in New York appears to be a legal filing, issued in September last year, which questioned whether X has the “general fitness and character to hold such licenses.”  

The filing alleges that X has “troubling and deep ties” to the Kingdom of Saudi Arabia, due to Saudi Crown Prince Mohammed bin Salman being an investor in Musk’s X project (and and shareholder in Twitter before it). The Kingdom of Saudi Arabia, the filing alleges, has a long history of brutality and repression, which it claims “has been fueled and enabled” by the platform itself.

It seems that X has been forced to re-think its payments strategy as a result of this challenge, which has led to it removing its NY application. There’s no word as yet on whether X will re-file its application at another stage.

It’s another blow for the company, which is still working to re-form itself into a new entity, and branch out from Twitter’s original social networking roots.

Payments are core to Musk’s “everything app” vision for the platform, stemming from his original plan for a payments/social app that he formulated back in 2000, when he was working at PayPal. Back then, Musk and business partner David Sacks came up with a product roadmap that would transform PayPal into an all-encompassing digital financial platform. But after he left PayPal in 2001, Musk says that they abandoned that plan, and rolled back several key features.

The idea has stuck with him ever since, and he has claimed, several times, that purchasing Twitter is an “accelerant to X”, and reviving his concept for an all-in-one financial and engagement app.

But now, X seems stuck at the first hurdle, while the company’s staring down a significant loss for the full year.

Really, as with most of Musk’s X plans, the whole endeavor now seems to hinge on the result of the upcoming U.S. election, with Musk going all-in to push for Donald Trump to be re-elected as President. If that happens, it seems likely that Musk will be able to leverage his new political influence to facilitate expanded opportunities for X, while push for more lenient regulatory consideration on several fronts.

Maybe, that’s where X is currently at. If Trump wins, it can reassess its financial and developmental state, with a view to Musk’s “everything app” plan, but if Trump loses, the avenues to getting the business back on track suddenly become a lot less clear.

Either way, right now, it seems that X is not close to providing payments as an option in-stream.