As Elon Musk seeks new revenue streams to turn around the company, Twitter has begun seeking regulatory licenses across the United States and writing the software required to implement payments on the social media site.
According to the Financial Times report, Esther Crawford, a director of product management at Twitter, is leading the development of the payments function, and the executive is emerging as a crucial lieutenant to Musk.
Musk previously stated that the acquisition of Twitter would be part of a larger plan to develop “the everything app,” a service that would provide social networking, peer-to-peer payments, and e-commerce buying.
Before Musk took over the firm, Twitter established a subsidiary, Twitter Payments LLC, in August. Musk just hired Crawford, Twitter’s director of product management, as the CEO of Twitter Payments.
In a regulatory filing, Twitter registered with the US Treasury as a payments processor in November. It has now reportedly begun to apply for some of the state licenses it would require to launch.
According to two sources who spoke with the Financial Times, Musk has stated that he wants the system to be fiat first and foremost, but structured in such a way that crypto capabilities might be added later.
Prior to Musk’s takeover, Twitter was considering allowing its users to receive tips, or digital payments, from their followers in early 2021.
The move is an extension of Musk widening sources of revenue for the social media firm as a result of advertising revenue cratering since his takeover. Recently, Siddharth Rao, an engineering manager overseeing the engineers working on Twitter’s ad business, reportedly told colleagues in a presentation at a staff meeting that more than 500 of Twitter’s major advertisers have suspended spending on Twitter since Musk took over in October.
Since assuming control of Twitter, Musk has cut costs. He’s fired half the company’s employees, refused to pay rent on the company’s other offices around the world, and refused to pay some outstanding bills, including a jet charter.
Twitter has reportedly failed to pay $3.36 million in December rent and $3.42 million in January rent for its offices at 1355 Market Street in San Francisco, California. This pushed the building owner Sri Nine Market Square LLC to file a lawsuit in state court.
The payment feature report comes as Twitter makes its first interest payment on the $12.5 billion in debt used by Musk to take the social media firm private last year. The corporation paid a group of seven banks, led by Morgan Stanley, who were unable to sell the debt to outside investors and were left with it.
According to Bloomberg calculations and market parties who were not involved in the Twitter purchase, the first coupon was estimated to cost Twitter some $300 million. For comparison, before Musk bought the firm with debt, Twitter paid less than $100 million in yearly interest expense.
While Twitter made its first interest payment, its debt load remains significant. Annual interest is likely to top $1.2 billion, with some of it carrying variable rates that may rise more as the Federal Reserve raises interest rates.
The pile includes a $6.5 billion loan that banks had wanted to sell to institutional investors, as well as $6 billion in bridge loans, split evenly between a secured and unsecured tranche, that banks had planned to sell as trash bonds.
Banks also granted Twitter with a $500 million revolving credit facility, which allows the firm to borrow, repay, and borrow again throughout the loan’s term. If Twitter borrows from it, its interest expense will rise.
Information for this briefing was found via Financial Times, Bloomberg, and the sources mentioned. The author has no securities or affiliations related to this organization. Not a recommendation to buy or sell. Always do additional research and consult a professional before purchasing a security. The author holds no licenses.