My Nationwide debit card lets me draw £500 a day from ATM’s with no mark up to VISA rates but charges 2% extra for purchases. So I use for purchases and Nationwide for cash withdrawals. Also has the benefit of having 2 different means of payment.
I hear what you are saying but I am not really talking about a lot of cash, £200 a month is really poor when you are abroad. Even £500 a month would be an improvement.
I suppose it makes sense to have two cards and use each each for what they are best at.
N26 gives you 5 free withdrawals in Euros then starts charging you after or 1.7% extra for any currency that is not the Euro
Monzo are unsure how to go ahead as their CEO has listed 3 options on ATM rates, will be interesting to see how this pans out in the future, no doubt the others inc Revolut will follow
Be interesting to see how Tandem go about as they bought their banking license by buying Harrods Bank after losing it initially
Given how perilous Tandem’s financial situation is, doubt they’d be able to subsidise unlimited fee-free ATM withdrawals for long.
They originally had a banking licence but forfeited it due to their financial position.
I would agree to a fair usage policy but to me that would be more than £200 a month.
Monzo were supposed to make money from their new current account thereby enabling fee free ATM withdrawals to continue, we shall have to wait and see.
It seems to me all these companies offer all these free services to suck you in then start charging soon after.
A disproportionate amount of users (Both for Monzo, as set out in their annual report, and for other fintech banks.) will use such a service excessively and cause most of the costs/losses.
I don’t think users have the right to use a service to the extent that it will bankrupt a company.
I quite agree with your comment but be up front about proposed charges from the start then we can decide whether or not it is a good option for us.
Commercial circumstances dictate changes.
I’m sure that all the fintech challenger banks, when they first started, didn’t anticipate a small number of users accounting for the majority of the costs involved with the ATM withdrawal.
An inflexible option, which you suggest (‘Forecasting and announcing in advance every single commercial decision in the future.’) is not viable.
I am not saying every commercial decision has to be announced in advance, and I do actually agree with a fair usage policy or it is open to abuse. I was just voicing my opinion that £200 a month ATM falls well short of fair usage, I think £500 would have been nearer the mark.
Previous thread on (the semantics of) ‘fair usage’.
Offering services such as fee-free ATM withdrawals are always a balancing act.
On the one hand, ATM withdrawals are (rightfully so) an expected feature of a retail banking product.
On the other hand, ATM withdrawals as a functionality incurs fees for the bank involved. Especially if it is made outside the UK/Eurozone.
‘Fair usage’ as a terminology is debatable.
Like any business decision, a balancing act.
Given how capital intensive ATM transactions are (as an aggregate, on the international level.), it should not be where capital is used (VC money, crowdfunding money, company revenue.).
You mentioned Monzo in both the title of your post, and the body content of the original post.
You have however, failed to mention that the days of unlimited fee-free withdrawals may be over.
A discussion on their respective forums has been brewing. Some excerpts below, and my thoughts on it.
The annual report publicly released by Monzo identified ATM withdrawals (in particular, withdrawals outside the UK/Eurozone.) being a significant source of costs.
In addition, a small slice of the user base is the origin of this cost base.
The CEO introducing the idea that there will be a quota in the future.
A shift towards mirroring Revolut’s policy of having a ‘fair usage’ monthly quota on fee-free ATM withdrawals.
Users looking to leave if a ‘fair use’ policy implemented.
Disproportionate amount of cost borne by the entirety of the user base (Via greater spending on ATM fees, therefore less capital directed towards other productive purposes, such as engineering/R&D, marketing and international expansion.), due to usage that deviates from the average volume of ATM withdrawals.
Very good point.
Even with paid ATM withdrawals (Beyond the £200 standard/£400 Premium quota for fee-free ATM withdrawal.), it is cheaper than withdrawing or transacting via a legacy bank, and safer than bringing cash in a bundle to the country that you are visiting.
Similarly, Revolut’s original product was that it is a dual feature currency solution. Firstly, as a currency account, with interbank rate for currency exchange. Secondly, as a debit card that can be used to spend money overseas, at the interbank rate for currency exchange.
Whilst ATM withdrawal is a supported feature (As acknowledged by the provision of fee-free ATM withdrawal, with a quota.), it is not the primary purpose of Revolut, nor where the value proposition stems from.
As seen, the fees stemming from fee-free ATM withdrawal not just a problem for Revolut, but for the entire retail banking industry.
Some subisidise it, as previously mentioned, by recouping the cost elsewhere via more expensive financial products with higher interest rates or more uncompetitive FX rates. Others use VC money/revenue to subsidise this. For the latter, the arrangements can last only so long before the the majority of capital is dedicated towards servicing fees incurred via ATM withdrawals.
Looks like your proposal of £500 wouldn’t be good enough.
Given how ATM withdrawal an auxiliary function of ‘neobanks’, due to the rise of the ‘cashless society’, legacy functions such as ATM withdrawal are not the main selling point of ‘neobanks’.
User feedback seem to indicate that £200/month fee-free withdrawal is a ‘fair’ amount, with a subsequent (non-profitmaking) percentage fee applied after.
-Given how ATM withdrawals are capital intensive due to fees (especially outside the UK/Eurozone.), a fair limit should be imposed for fee-free ATM withdrawals.
-Fee-free ATM withdrawals deemed (rightly so) a core part of a retail banking product.
-At the same time, this should be balanced with cost controls.
-Further withdrawals (Revolut’s is £500/day.) should be charged as a percentage fee.
My last words on this subject.
I did not come up with the phrase fair usage policy (sic), that has been bandied about by various card companies themselves.
I am also not against annual card fees or ATM withdrawal fees.
What I am against is wasting my time applying for various cards from companies who promise things that they know from the outset are unsustainable just to get you hooked.
I would much rather everything was clear from the outset and then I could weigh up all the options and decide which is best.
In regards to cash withdrawals, how often to people draw out cash is a big question.
the fact that monzo and revolut cards are using the MasterCard service is which one the big global card transaction providers with most retailers and food outlets, restaurant to accept this, i cant see many people always taking cash out. it is understandable that not everywhere accepts card transactions. so in regards to this the amount a person would withdraw wouldn’t be a large sum of what i cant think of.
Personally on a very rare occasion i would withdraw cash from an ATM over here, abroad though with certain cash machines in countries i.e Canada B.M.O charge around a $3 withdrawal fee that would be charge to the yourself. so i can see in one aspect that people wanting to draw a large amount at once could be an inconvenience.
Seems like they learning from Revolut
Having limitations on fee-free ATM withdrawals is not to spite users or to ‘punish’ them, but a realistic assessment of the commercial circumstance.