What X's new money transmitter licenses tell us about Elon Musk's all-in-one fintech app ambitions.

Hot off the press in the world of fintech: X (you know, the platform that's so much more than tweets) is making a splash in the fintech ocean with its newly minted Money Transmitter Licenses (MTLs). You've probably already heard about X's big vision of becoming an all-in-one app; taking a leaf out of WeChat's book, Elon Musk envisions a platform where users can seamlessly read news, hail rides, book appointments, pay taxes, and more, all within a single platform. Central to this grand vision are Money Transmitter Licenses (MTLs), and as of December 2023, X has snagged these licenses in 12 states! Becoming a licensed money transmitter is a notoriously long process for any company, but the capabilities X can unlock from there will have a colossal impact on the fintech industry. Let's decode the early takeaways on what obtaining MTLs means for X, and why the platform is still year(s) away from becoming an all-in-one app.

Magic unlocked by MTLs

MTLs are akin to golden keys unlocking the vast kingdom of financial services. They allow the holder of the license to send, receive and hold money for its customers. Imagine a world where X not only connects people through tweets but also through financial transactions.

 Here's the scoop on what these licenses could unlock:

• Peer-to-Peer transactions reinvented: X, armed with its newly acquired Money Transmitter Licenses, is about to transform how we send money to each other. Imagine this: You're chatting on X and decide to split the dinner bill or pay back a friend – it's as simple as a few taps within the same conversation window. This effortless flow of transactions within X's platform is a direct challenge to Venmo and CashApp. What sets X apart isn't just the convenience; it's the integration into an already established network where millions interact daily. This native functionality within X could significantly disrupt the current peer-to-peer payment landscape, outpacing Venmo and CashApp by offering a more streamlined, integrated experience that aligns more closely with users' natural digital habits.
• Creator interactions re-imagined: X could also be setting the stage for a new era of creator-audience interaction. No longer limited to likes and comments, users could now show their appreciation with direct financial support, transforming the way we engage with digital content. Beyond just receiving tips, creators could even directly sell products or services within the X app, seamlessly receiving payments without ever leaving the platform. This integration streamlines the entire process, from marketing to transaction, making X a one-stop-shop for creator-driven commerce.
• Banking features without becoming a bank: MTLs extend X's capabilities far beyond just payments. These licenses allow X to hold funds on behalf of its customers, and even facilitate bill payments for them in many states. The ability to hold funds opens up a realm of possibilities for X to introduce services typically offered by traditional banks. One such potential offering is high-yield savings “accounts” or saving wallets. Since X is not a bank it can’t open an actual savings account for its customers but it can open For the Benefit of (FBO) accounts and hold customer deposits in banks. They can then pass on the interest rates to the customers in their savings wallets but since they are not an actual savings account, X will likely need to call it something other than interest rate e.g. a “bonus” or “incentive”. Imagine a creator has been receiving direct payments from X’s users and they also need to pay their friends directly via X, they will be inclined to keep their cash in the app/a wallet inside the app. Once this starts happening, X could provide them with a high “bonus” (akin to interest rate) on the deposits to help their money grow within the app. Furthermore, X could also offer bill payments that could be directly connected to the deposits in the X app. If you think about it, the primary functions of a bank account is receiving money, handling bills and expenses, transferring funds to peers, and saving money. And now all of this can now all be managed within the X app, thanks to MTLs.