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Welcome to The Payment Expert weekly podcast, brought to you by SBC Media. Each week we analyse the news driving the global payments industry forward; the innovation, the infrastructure, and everything that has to happen to make it all possible.
Louis (00:00.94)
Hello and welcome back to the Payment Expert Podcast, your source for the latest news, insights, and analysis on the payments industry. I'm Lewis Thompson, news editor at Payment Expert, and back with me today, I'm delighted to have Callum Williams and Kieran O'Connor, our senior journalists here at Payment Expert, here today to talk about all things X Money. Callum, Kieran, good to have you both back on. It's been a been a bit of a while, hasn't it?
Anaya (00:29.327)
Yeah, it's been it's been a while. We've had quite a lot of guests in between, haven't we? So no, it's good. It's good to be to be back on.
Louis (00:37.282)
Many guess. And I know you've both you've both covered this I suppose launch last week. X launching X Money nationwide over in the US for its US premium and premium plus subscribers. it kind of I suppose if you're if you're following Musk when he promised, you know, that he would have an everything app back when he bought what was then Twitter in in twenty twenty two. four years on, now he's got his first
banking product. I suppose the main argument a around the launch of X Money is, you know, is it the start of a of a US super app or is it too good to be true? Is it is it doomed to fail, Callum? Is it is it real or is it a a gimmick?
Anaya (01:25.037)
Well, it's definitely real. It launched last week. Yeah, I think obviously time will tell. It's obviously quite a short, we've got quite short use cases at the moment what we're working with. Obviously it's only available to USX Premium and Premium Plus account holders. And it's obviously offering quite a lot of incentives such as 6 % APY, interest.
Louis (01:28.59)
Is it gonna last?
Louis (01:45.388)
Yeah.
Anaya (01:51.343)
Instant transfer bank account to account transfer should be say and in terms of payments and then there's obviously quite a lot of Limits and holdings and what you can hold within the actual It's I would say digital wallet within the within the app. So it's Obviously very early days. I think this is obviously been a part of musk's plan since he bought Twitter. I still call it Twitter
Twitter back in October 2022 and even since then he's been talking about getting payments onto the social media platform and I think it's took a while, it took almost four years but I think he's definitely going to commit to it. Obviously he co-founded PayPal back in the late 90s so Made Payments has always followed Musk wherever he's been in his business life so I can see him committing to this.
Louis (02:43.084)
Yeah. I mean obviously we're from different parts of the UK as our listeners can probably tell. So it's not it's not available over here. But is it I mean like l looking at it at as it's launched, would you trust it? Like would you actually put your put your own salary in it?
Anaya (03:00.367)
No. Pretty much no. There's been quite a few ex-account hacks happening recently in terms of high profile hacks of accounts like the Robin Hood CEO, Vlad Tenev. His account was hacked recently and that was used by hackers to promote a fraudulent meme coin that kind of ran up to about $1.3 million of stolen funds. hacks are still happening.
Louis (03:03.007)
Ha ha.
Anaya (03:29.919)
every day almost when it pertains to the security of X and I mean just imagine if you're trying to put your live savings and trying to get some of that six percent interest I think it's don't think it will end well and yeah.
Louis (03:43.798)
Yeah. Well also will it last. Well, Kieran, you spoke quite glowingly, in certain terms about about the launch of X Money. I I guess I'll put the same question to you. Would you put your money in it? I'm guessing yes.
Anaya (03:47.715)
Yeah.
Anaya (03:55.503)
I've had a really hard think about this and I actually at first was like why not? 6 % APY, that's way better than what I'm getting at the minute, don't name drop any banks.
Louis (04:05.375)
It's more than the national average in America too, which I think I think the FDIC's got it around naught point three eight at the minute. so whether that lasts, but who knows. But yeah, so so y you initially were going to well, if you could have, you would have put your money into it.
Anaya (04:20.172)
If I could have, I would have. I I don't know. Where my head is at the minute is what's the big difference between sort of, know, and feel free to come back on me, to come back at me with this, but what's the big difference between ex-money and what they're trying to do now as to when people started putting the salaries into Monzo when they first sort of launched with deposits? Because I understand, because ex-money is also backed by a bank.
Is it Cross River Bank, I believe? So it's not actually X that are keeping your money. It's not Elon Musk in that sense. So if you're brave enough to put it in something like Revolut or Monzo or one of these other challenger banks, then why not go and do it in X money? Especially when they're giving you such good interest rates.
Louis (04:51.981)
Cross River Bank, yeah, that's right.
Louis (05:14.261)
Yeah, I mean it's the same it is the same principle as like a lot of different fintechs where they're kind of backed by banking providers to sort of run the banking services and you know with a load of bank partners for insurance as well, for example. I suppose the thing I mean, as it comes to X money, that the point is that a lot of people in the US have they have a bank or they use maybe a ZIL or a Venmo, they have different financial products already entrenched. And if he's c coming out basically saying
You know, I want to create an everything app, maybe a bit like what we have in in Asia with the likes of WeChat in China, which is very popular, which everyone d pretty much uses everything for to be quite generically on on the topic. But within the US you've got different products already entrenched. So I I mean I'm guessing he's got, you know, you mentioned the six percent APY. I think they've got new kind of visa.
debit cards personalized and you can get your X handle kind of embossed very nicely on it. Three percent cash back, no foreign exchange. All these kind of marketing I g you could almost argue it's it's it's part of a marketing spend, right? Because a lot of it, particularly the six percent APY maybe won't maybe won't last. so in that sense, maybe it's a customer acquisition drive.
Anaya (06:19.245)
Yeah.
Louis (06:38.357)
And if that's the case, do you think do you think it will work? Do you think many people are are gonna go for it? Obviously it's kind of limited at the minute with the the users that can use it with premium plus and US premium. do you think he's kind of testing testing the waters a as it were?
Anaya (06:52.654)
Yeah, I mean in that case as well, think I'd, to go back to your previous question, I think I'd use it and put my wage in it for the first few months until they drop the interest and then I'd take it out. But no, to...
Louis (06:56.898)
Yeah.
Well it's expensive to keep changing back and forth though as well, isn't it? It's quite time consuming. the amount of products that come out.
Anaya (07:06.67)
I guess, yeah. Yeah. I guess when it's trying to compete with the likes of Venmo, I don't really see them two competing. I think they both serve completely different purposes, although there are some obvious similarities. Venmo, at the minute, in the US is used to sort of split bills and, you know, send money to your friends and family.
And it doesn't come with that subscription that ExMoney does, so it's pretty much free to use. Where ExMoney at the minute obviously costs things like, is it around $8 I think a month that you have to pay to sort of be able to use it? They keep promoting it relentlessly. Yeah. No, I don't think anyone's buying it at the minute. And then I think also ExMoney, although he's obviously trying to attract people to deposit funds into the account, I think at the minute it's more...
geared towards the people like the creators and the people who are posting an X and making money through their posts on X as a way to sort of pay them easily or easier than what they're doing already. Yeah, I think that's also what Cross River Bank are also on board to do as well as to kind of streamline that engagement, monetization and stream that many of the many X users gain from. think they've kind of almost streamlining that payroll process. But it's funny you mentioned, Lewis,
the that maybe it's a marketing spin because I think when Musk first had the plans to introduce X money, much of the company's revenue was coming from from ads and advertising revenue about 70 to 75 percent of twenty twenty three total revenue was made up of ad revenue. And I think obviously it also lends itself.
Louis (08:51.798)
Yeah.
Anaya (09:00.749)
for X to become a super app because the more different type of facets you have, whether that's post messaging videos, ad revenue, then also transaction revenue as well, it's just a different diversification of your revenue streams, right? So I think that's also what he's trying to do. But we'll have to wait and see. I think the first use case will be the US and then grow from there, I guess.
Louis (09:29.375)
Yeah, I I I guess there there are also there's the other angle of some maybe regulatory concerns around it. I know Senator Warren she's been quite vocal on a lot of things, including the Clarity Act, but she I believe sent a letter back in April, a formal letter to Musk, sort of raising those consumer data and and oversight concerns a around it too, and you sort of having I guess a platform which has user data but for for a different thing that's not as
and has hasn't been sort of historically as regulated as financial services and then now bolting on financial services to that as well. So there's there's that kind of issue there. Do you think there's that there's obviously the chance that that could the regulatory oversight could sort of come back to bite musk. I know he was sort of as part of Doge he kind of helped kind of minimize the kind of regulations around things that now it looks like X money may have previously
sort of fallen under. so y maybe you could argue he's kind of influenced things on the political level there too. Do you think that could eventually sort of come back round as politics changes in the US?
Anaya (10:42.381)
It doesn't mean it harkens back a little bit to when Facebook or Metta, as it's now known, they tried to launch their stablecoin Libra. That caused a whole coup around sovereignty and currency and had everyone panicking. But that was also to do with consumer payment data as well, right? In terms of how we allowing these big tech companies to now also get data from payments and transactions. So Musk's never been shy of battling, whether it be regulators or just
Louis (10:53.526)
Yeah.
Anaya (11:11.787)
his opponents in general, be honest. So that fight in itself, he'll be up for it. But I think in terms of the security, like I mentioned before, in terms of like the hacks and just general safety over your account, obviously it will be linked to your ex money account as well. I think that's more prevalent when it pertains to just consumer safety as opposed to some of the existing cyber security laws that might exist within the US at the moment, I think.
they would maybe need to have a look at that and think, well, how can we just beefing up these, these are cyber security rules, so hacks don't happen and money's not lost. Yeah, on that, is that not a benefit of ex money as well? I know like the payment companies in the UK and the US are all talking about how most of fraud starts on social media. Having sort of a social media app now in the payments world, will ex not be
be more, I don't know, encouraged to try and stop scams, yeah.
Louis (12:12.64)
You think it might highlight the kind of Yeah, it might highlight the shortcomings maybe of where social media, you know, doesn't doesn't fit the bill or where scams go through. I mean Callum's right, I mean there's thousands of reviews I guess on if you go on things like trust pilot where people say their accounts have been suspended, they've only had support from l you know, like bots, no route to a human, etcetera, etcetera. So then extending that out to a payments product in in X money is obviously a
maybe gonna raise those issues and th those hacked accounts. Does that extend to the money side? We'll have to wait and and see, I I guess at the minute.
Anaya (12:50.285)
It is interesting because when you also partner the payments up all within the same app with the ads and then also the fraudulence ads and then also the bots and stuff like that, it can all combine into one. You may click on links and accounts even that could just immediately send you to a dodgy site or a dodgy link and then...
It gets into your ex money account like we still we're still in the early phase of this boys. It's a good point to mention that Yeah, it could be happening
Louis (13:22.378)
Yeah. Well I think actually it's I've got a note here I've just I've just found on X's FAQs which says that users must report unauthorized transactions quickly or risk losing the funds. I think the line is your liability for unauthorized electronic fund transfers may depend on how quickly you report. which kind of goes back to the other issue of well, if you can't get through to someone and it's only and there's only bot support, how
Anaya (13:51.105)
So basically if you don't do it, so basically if you don't do it quick enough, you've lost your money. Like that sounds, that sounds sensible doesn't
Louis (13:51.168)
How can a a user potentially do?
Louis (13:56.084)
Yeah. Yeah. So may well, I don't know. Well so Kieran, you you're still in favour, but now have have we maybe kind of swayed you the other way a little bit? So I
Anaya (14:03.532)
I mean don't get me wrong I can definitely see the holes in Musk's ex-money plan. There's obviously some big question marks around it and like you said we'll only sort of see how they'll be answered in the coming months and if stuff goes completely wrong which you two seem to be hinting at we'll see but I know the thing is I can just see the
Louis (14:28.615)
Completely impartial over here.
Anaya (14:34.058)
I've just tried and take a more positive outlook on life, I guess, compared to you two, and I can sort of just see the benefits of X. And even if it's not X money, which takes off, and it's not necessarily the most that we want to make richer, there might be someone else who does it or someone else who gets an idea from it and sort of innovates in this line of work and, yeah, improves payments.
Louis (15:00.573)
Yeah. We should change this to the to the philosophy podcast maybe. Ki Kier and I host. one thing we haven't mentioned about this is that there are kind of coverage gaps too. So X at the minute doesn't have a money transmitter license in New York or Massachusetts, I believe. So if you know your X card were added to say Apple Pay or Google Pay, it can't at the minute be used everywhere.
Anaya (15:04.566)
Yeah
Louis (15:29.713)
nationwide, and obviously New York is it's one of the biggest cities, vibrant hubs in in in America. do you think with with with that in mind it's a real barrier to kind of adoption of of X money? and maybe are the the kind of the features that have been promoted, the six percent APY, three percent cashback, etcetera, do they maybe mask
Certain flaws like like a coverage gap if you go from maybe a certain state and and come into New York and then all of a sudden you can't you can't use your your X money account.
Anaya (16:10.636)
Well, don't know about New York. I I've only been a handful of times. But, Ciaran, you actually know a bit more about Massachusetts, don't you? Yeah, I do. Yeah. guess one of the big things for this is obviously the coverage gap. Yeah, you can't use it in a certain state. That's massive. Unless maybe you use a VPN. I don't know when people will do that or not. I guess that's always a workaround. Not promoting that, but that is maybe a workaround. There is obviously a big coverage gap. However, at the minute,
there is maybe a positive side to ExMoney not being live in New York. I mean, we've seen New York recently take such a hard line on the likes of these P2P transfer payments companies around fraud, and they've pretty much been suing everyone, it seems, at the minute. So while it's in these early stages, maybe it's a good job that they're not live in New York.
However, yeah, Lewis, I can see there's a huge coverage gap. And like you said, you've got Boston and Massachusetts, New York and New York. These are two massive cities that really, if you were going to be launching any kind of payments company, you would want licenses there sooner rather than later.
Louis (17:29.619)
Yeah, sure. let's touch on Kieran a a bit about what you spoke about last week 'cause I know you did sort of speak about the the in in your paper check column around it and to do with I suppose if you're if you're banned from X are are you banned from your your ex money account. and you found that, you know, the policy only bites bites for certain, you know, child safety and violent and hateful entities policies w within X.
Why do you think that that policy works particularly well?
Anaya (18:02.508)
I guess my line from why the policy worked particularly well is mostly due to it sort of giving people real consequences for sort of how they act. I mean, if you have your payments and your social media all under one roof, I think social media at the minute has become such a wild west and people can say anything and do anything. And I understand that this policy is only for the worst of the worst. It is only for, like you said,
the child safety and the violence slash hateful entities sort of areas. But maybe I'm being really hard here, but I do think there's some sort of benefit to sort of being able to take someone's privilege of sort of payments and banking away if they are the worst of the worst people. And then also the fact that they send a paper check to the person's address, I thought was just.
quite hilarious to be honest. mean, some of these people who would be getting them would be people who are sort of trolls online and spend most of the days online in the mum's basement, I think I wrote in my column, and sort of having them receive a paper check, then having to go to a bank in person, queue up for about three to four minutes just to check it in to get the remaining balance back in another bank. I think it would be amazing and quite funny.
Louis (19:02.387)
Ha ha.
Anaya (19:31.392)
So yeah.
Louis (19:32.009)
Yeah. Obviously the people that do sort of fall foul are probably certain people who yeah, have breached a certain limit. and I suppose as an the the amount that do that, that do fall foul of those regulations that are users of X Money, I suppose it's a small number, but it's an interesting point to make around around the governance the governance of it. lastly guys, I just wanna touch on a bit about
I I guess the trend of these new payment payment services coming out, new financial services, obviously we mentioned the benefits that have been touted with X money with the six percent APY and it's all perhaps designed to to lure people in for that product. We've seen something like that recently. I know we covered T Yo, which was that kind of buy now pay maybe product. Obviously that was sort of on rail based on st stable coins, but it's the same kind of principle of
I suppose enticing people for for a different kind of product and sort of giving them sort of really really good value for for the product that they go and go and bank with or, you know, work with. d do you think th that that's a growing trend and do you think maybe there needs to be more maybe public public discourse around what that means for people? I mean do people need to be more cautious before
sort of seeing that the the bright lights of a of a new product that seems fantastic. but obviously th there may be drawbacks and those perks might not last forever.
Anaya (21:10.859)
I think it's just like everything almost it just comes to trust and like I mean Visa and Mastercard are the two biggest card networks in the world because they're also the longest and the most trusted right I think payments is all about trust for the consumer and it's also about stability for our businesses and I think I just think non non-traditional finance firms they they've obviously gotten within into payments route embedded finance and
banking as a service, cetera, et cetera. But I think it does come to a limit. think one thing that kind of is similar to this, Lewis, is towards the end of last year, every company would just felt like launching a stable coin. And I was like, I think this is getting a bit out of hand at this point. think Klan has had their own stable coin so far. I think when you've got a market as such in its infancy like the stable coin market, you don't then start to need to just hop on the train and just start.
launching your own stablecom without no real explanation of to like, well, what's this for? How can we develop this? What's unique and separate to the other stablecoms like USDC and USDT? So, yeah, I think the load of companies is going to keep continue to doing this. It's just a matter of fact. If you want to try it, try it. And if it works for you, it works for you. But yeah, I guess.
Louis (22:32.222)
Yeah, cool. Okay guys. in a word, X Money, a success or not?
Anaya (22:40.031)
I'm gonna say it's gonna be a success. Not in the way that people might think, as in it's gonna take over and be the way that people send each other money, but in its own little ecosystem, I think it's gonna be a success. And I think you're gonna see the likes of Facebook and other social media platforms try and replicate it in the coming years.
Louis (23:02.57)
That was the longest word I've ever heard, Kieran, but thank you anyway. Callum.
Anaya (23:04.555)
It was hyphenated. No. I'll just play devil's advocate and say no, but I actually think it has got legs to be fair. We'll just have to see how it goes, but I'll just say no because Kieran said yeah.
Louis (23:20.948)
We'll have to see. Well, hopefully we'll spark some debate around it. I'm sure many of our viewers and listeners will have their own their own take on it. unfortunately that is all we have time for today, but thank you very much, Callum and Kieran, for coming back on this week. if you've been watching and you're not already subscribed to the Payment Expert Podcast, make sure to subscribe wherever you do get your podcasts with plenty more insight and analysis coming over the weeks and months ahead. And for the latest news as it happens, head over to paymentexpert.com.
We'll see you all next time.