Elon Musk's social media platform X launched its banking service, X Money, on July 28, 2023, for all US subscribers of its Premium and Premium+ tiers. This rollout expands a service that had been in a limited test phase since late June. X Money allows users to hold deposits, send peer-to-peer payments, pay bills, transfer money by wire, and mail checks within the app. Deposits are held at Cross River Bank, a New Jersey-based lender, and are insured by the Federal Deposit Insurance Corporation (FDIC) up to $250,000.
Key Details
The service offers an annual percentage yield of up to six percent on deposits, which is competitive compared to the four to five percent offered by leading high-yield savings accounts and significantly higher than the near-zero rates at traditional banks. Premium+ subscribers can earn the top rate directly, while Premium users must meet certain direct-deposit requirements, according to the company.
Background
Musk has expressed his ambition for X to evolve into an “everything app,” similar to China's WeChat, which integrates messaging, shopping, and payments. The launch positions X to compete with established payment platforms like PayPal's Venmo and Block's Cash App, leveraging its extensive user base. However, the service has drawn scrutiny from lawmakers; Senator Elizabeth Warren previously questioned Musk on the sustainability of the high yields offered by X Money.
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The introduction of X Money could disrupt the digital payments sector, particularly affecting platforms like PayPal and Cash App, as it offers higher interest rates on deposits. This move may attract users seeking better returns on their cash, potentially impacting the market share of existing financial technology services.
Investors will watch for further developments in X's banking capabilities and any regulatory responses to its new financial services.