Trust and finance: Twitter and Binance seek expansion

Like other companies around the world, Twitter and Binance are both expanding their finance and payment ambitions: while the former will need to build trust, the latter sees an opportunity where trust is lacking.

Why it matters

Twitter is an important and influential platform, but will people trust it to process their payments? Elon Musk’s experience with PayPal, whose x.com was merged with the payment platform in 1999, will inspire confidence in some.

Trust is critical to financial services, which partly explains why the sector is dominated by large established brands capable of inspiring confidence at times of economic instability. Following the last few months of turmoil at Twitter, the company has a lot of work to do in this space.

The need for an established, trusted brand also explains the partnership between Binance and Mastercard. Here, trust is operating not only at the level of the brands involved – useful at a time in which crypto’s name was tarnished by the sector-wide FTX ‘earthquake’ – but at the level of unstable markets and political environments, which have opened up an opportunity for crypto.

Twitter targets payments in everything app move

Under Elon Musk’s eventful stewardship, Twitter is applying for regulatory licenses across the US that would allow it to build payment services on the platform, according to reports. It follows a November regulatory filing with the US Treasury in which Twitter signed up to become a payments processor.

For Twitter, this is an extension of existing payments activity that had mostly surrounded tipping creators, and which now aims much further.

While crypto is likely to be an option, sources who spoke to the FT explain that the system would be primarily built around moving fiat currency. It’s likely that with the crisis of trust in crypto in the last few months following the collapse of FTX, keeping the service to trusted currencies will help establish trust.

The plan is part of a wider project to diversify the company’s revenue stream away from advertising, which has suffered since Musk’s takeover, and plays into a long-stated ambition of an “everything app”. It echoes some of the East Asian super apps like WeChat and Alipay that dispense a large array of services often anchored by a peer-to-peer payment system. 

However, such a plan faces several key barriers: extensive and mature competition in US payments, the far higher regulatory burden that comes with being a payments processor, and questionable consumer trust.

Binance looks to crypto in Brazil

Mastercard and Binance are set to launch a prepaid crypto card in Brazil, according to an announcement on the crypto exchange’s blog.

Users with a valid national ID will be able to pay using 14 different currencies as well as the Brazilian Real. The product follows the successful launch of a similar card in Argentina by the two companies last year.

“Brazilians are eager to embrace crypto beyond an investment asset. Today is an exciting step in our crypto journey, which draws on the strengths of both our trusted global network and Binance’s infrastructure to support consumer choice in payments,” said Marcelo Tangioni, Mastercard’s country manager in Brazil.

It’s interesting at a consumer level that Binance and Mastercard have entered these two markets: Brazil is Latin America’s largest economy but is experiencing a profound political division, while Argentina is the continent’s second largest but has suffered inflation issues for decades which have worsened in the last year.

Bottom line

Critical to trust is consistency: payments need to be fast and predictable but so, too, does the currency in which you are paying. Companies linked so closely to the activities of one individual can suffer when the individual’s reputation suffers, as in the case of another of Musk’s businesses, Tesla. Meanwhile, other firms can move into a deficit of trust, providing stability when it is hard to come by.

Sourced from the FT, WARC, Reuters, CNBC, Binance