Elon Musk’s X Money move begins: Entry into the financial market with 6 percent interest and a Visa card

The financial leg of Elon Musk’s goal to transform X into a “super app” has been activated. The X Money service, which opened to Premium+ subscribers last week, began to be made available to other verified user groups as of June 29.

The platform is being introduced with features such as 6 percent annual interest on deposits, a custom metal Visa debit card in the user’s name, account-to-account money transfers, 3 percent cash back, and government protection of up to 10 million dollars for high-tier subscribers.

Since X does not have its own banking license, the service is operated under a “Banking as a Service” model. User deposits are held within the infrastructure of the New Jersey-based Cross River Bank. While FDIC protection on standard accounts goes up to 250 thousand dollars, it is stated that this limit can be increased to 10 million dollars through a cash pool system developed for Premium+ subscribers.

For money transfers, Visa’s real-time payment system, Visa Direct, is used. Through this infrastructure, a faster payment flow is targeted for users and content creators compared to standard bank transfers.

SERVICE CURRENTLY IN 41 STATES

For now, X Money can be used by verified users aged 18 and over in 41 US states where X Payments LLC holds a money transmitter license. New York and Massachusetts are among the states excluded as the licensing process has not yet been completed.

The new service has also brought about debates regarding oversight and security in Washington. In a letter sent to Elon Musk by Senate Banking Committee member Elizabeth Warren, the sustainability of the 6 percent interest rate and the possibility of user data being used for commercial purposes were brought to the agenda.

Senators from New York also requested that the state’s financial regulator reject X’s license application, citing potential gaps in identity verification processes. The discussions also included allegations that sensitive consumer payment data might have been accessed during Musk’s tenure at the Department of Government Efficiency.

Musk’s goal is to transform X into a multi-functional platform similar to WeChat in China. However, the presence of strong competitors in the US such as PayPal, Venmo, Cash App, and Apple Pay, along with the banking habits of users, will be decisive in X Money’s growth process.

According to experts, X Money highlighting FDIC protection could create a significant advantage. Conversely, for users to move their savings to a social media-based platform, X will need to provide assurance in the areas of security, anti-fraud, and regulatory compliance.

News Source: 12punto