MW Elon Musk was pushed out at PayPal. Now he's launching a rival that could 'disrupt' it.

By William Gavin

Musk has broader reach than PayPal, analysts say, and his X Money is offering a high 6% interest rate to attract users

Elon Musk wants his social-media platform X, which is owned by SpaceX, to become an "everything app."

More than two decades after Elon Musk left PayPal, he's getting ready to launch another fintech service. It could pose a threat to his old stamping grounds.

X Money, a planned digital wallet and payments service integrated into the social-media platform X, has the "potential to disrupt U.S. payments," wrote Mizuho analyst Dan Dolev as he downgraded PayPal's stock (PYPL) to a neutral rating after being bullish on the stock for the past two years.

Dolev also lowered his price target on the stock to $50 per share from $60 per share. PayPal shares were down 0.7% in recent morning trading and were just below the new price target.

X Money, which is expected to exit a beta program this month, is part of Musk's attempt to make X an "everything app," similar to China's WeChat. Musk in February put X, artificial-intelligence startup xAI and SpaceX under the same roof as the combined firm prepares for an initial public offering.

"The playbook seems clear: replicate the WeChat Pay / Alipay models where communication-plus-commerce live in one interface, with payments becoming a default behavior inside the feed," said Dolev. "If successful, X Money could turn social engagement into native transaction flow, expanding the addressable user opportunity meaningfully over time."

While an ambitious play, Musk does have experience with financial technology. In 1999, he co-founded the original X.com, one of the first U.S. online banks. The company later merged with rival Confinity to create what would later become PayPal. Musk was named CEO, but was eventually ousted in a "palace coup" and replaced by Peter Thiel, a Confinity co-founder and future Palantir Technologies (PLTR) co-founder.

See: Space investing is heating up as SpaceX rockets toward a record-breaking IPO

Now, X Money is a threat to PayPal. Dolev noted that Musk has a broader reach than PayPal and Venmo, the payments apps that offer a social experience.

While Venmo processed some $330 billion of volume in 2025 across around 100 million active accounts, X has between 500 million and 600 million global monthly active users, according to Dolev. Even a "modest" conversion could create a "meaningful" peer-to-peer revenue stream, he said.

Adding payments directly on X also opens the company up to native social commerce that bypasses traditional e-commerce checkout flows, potentially diverting volume from PayPal's "crown jewel," its branded-checkout button, according to Dolev. That could hurt PayPal's checkout economics, which drive much of its profit.

PayPal's growth has also softened. Annual sales growth has decelerated over the past five years through 2025, and is expected to slow further this year, leaving it less room to fend off threats like X Money.

Even though Dolev doesn't expect meaningful impact from Musk in the short term, the rising competition adds to an "already mixed outlook, limiting upside sentiment and valuation."

Read more: PayPal's stock pops on takeover hopes. Here's who could swoop in with a purchase.

But what is X Money?

Although the service isn't public yet, information has been slowly rolled out through beta users, or those helping test the product.

For X Money's beta program, Musk leaned on both employees and a fundraiser from "Star Trek" actor William Shatner to invite participation. According to several beta users' public posts about the program, users can move money into deposit accounts hosted by X that offers 6% annual percentage yield. Users can also get 3% cash back on some purchases.

"It also includes many other features like direct payroll deposit, wires, checks, ATM withdrawals, cash deposits, and in social app P2P transactions," Walker Petty, a comic book author who goes by the pen name Redwriter and is participating in the beta, posted on X.

Maintaining incentives like 6% APY can be difficult and may even be unsustainable over time, Xiang Zheng, an assistant professor of finance at the University of Connecticut, recently told MarketWatch. Dolev noted that 6% APY is "far above" the national average rate and competes with or exceeds U.S. money-market funds.

Deposits are held by Cross River Bank, which has made a name for itself by partnering with fintech companies like Affirm. The Federal Deposit Insurance Corporation-backed bank insures deposits of up to $250,000 per individual.

In a letter to Musk on Monday, Democratic Sen. Elizabeth Warren of Massachusetts called the bank a "repeat offender," noting that it has been subject to FDIC enforcement actions in both 2023 and 2018. She also questioned the 6% APY.

"It is unclear what risky investments, intrusive data monetization activities, or gimmicks either X Money or Cross River may intend to engage in to pay that yield when the target federal-funds rate is 3.5-3.75%," Warren wrote. The senator asked Musk to provide details of his plans and X Money's potential risks by April 21.

A representative for Cross River did not immediately return a request for comment.

X has also partnered with Visa (V), which Dolev said could be a near-term winner of X Money's service and sits "at the center of funding, P2P and cash-out flows." Mastercard $(MA)$ could also benefit if X adds a second network using "Mastercard Send" to boost its reach, he added. X Money could also look to boost volume by using digital stablecoins, Dolev said.

Don't miss: Is PayPal bound for a breakup? Why the company's problems seem so hard to fix.

-William Gavin

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April 16, 2026 11:54 ET (15:54 GMT)

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