Hello, I really love my Monzo card since signing up last March and have since used it in Europe on 4 separate occasions (leisure & work). I think it’s fair that Monzo should propose alternative pricing strategy and that a minority of users should not subsidise those that stop using their card once returning to U.K. While option 3 (free allowance + fee afterwards) would be my preferred option I wonder if you had considered NonUK withdrawal fees for those that do not maintain a minimum balance on their prepaid debit card. For example, £50-£100 and that way the balance of accounts should hopefully generate sufficient interest to cover nonUK ATM costs. I’m no financial expert/professional so please excuse my naivety, as they may not be feasible or how things work. My only concern would be that low-income users might be excluded this way, but perhaps your market is different, I.e UK ATM withdrawals would be free whereas nonUK ATM users would only pay fee when no balance. That might also encourage long-term use.
I’ve gone for the £200 monthly allowance but think a higher (£500) yearly would be better. That would cover those of us who just use if for a couple of weeks holiday in the sun.
I think that a mixture of options 1 & 3 would be a good idea as previously stated, first £200 free and then 2/4% for Europe/Outside. However, I have a few questions:
Firstly, you say that Monzo has to cover this cost, so how is it sustainable even giving people £200 for free, you still have to cover this cost somehow?
Secondly, with regards to the first £200 free, how would this work - if you withdraw £400 at once, is all of this subject to the fee, or the first £200 of that specific transaction free and after that costing the fee? Because when you withdraw in another currency you don’t know exactly how much it is in £ till you’ve done the transaction - you might have a clue, but not really, so don’t want to withdraw £201 and the entire thing be subject to a fee?
Do Monzo know the cost on each transaction, or can you only guess averages (hence the % attirbutions mentioned in the options)
Conclusion:
It strikes me that giving people a free allowance sounds great in theory, but if Monzo has to cover this cost somehow then it’s only a fee elsewhere or a cost Monzo has to cover - it sounds entirely fair to pass on all the costs Monzo incuur with no mark ups to the user, that will only incentivise people to stop taking out cash and pay more directly by card.
Does it matter for a customer how much providers are charging monzo? We really want monzo to offer a product that suits every need and that make customers happy but an awesome app is not enough to make everyone happy. Instead of changing policy while running it would be nice to give everyone a free yearly allowance and then start charging proportionately.
Going to add to the pile of annual limit instead of monthly. Some countries I travel to I never need cash, others I do. £200 is more than enough for those that I don’t, but (slightly) too little for those that I do.
With any good system - there will be those that choose to exploit it.
If Monzo look at card usage by spend, is it possible to have tiered accounts? for example if
Tier 1 80-100% of your spend is UK - your overseas rate is @ 0%
Tier 2 50-79% of your spend is UK - your overseas rate is @2.5%
Tier 3 0-49% of your spend is UK - your overseas rent is @4%
This means that those who use the card abroad as an extension to the UK retain the best deal.
Those who use it equally get a reasonable deal.
Those who solely use it as a free overseas cashcard, are still getting a better rate than the banks (unless having an HSBC advance card) but are no longer able to take advantage of the system - and now subsidise the overseas spend of those who use the card every day.
It would be really easy for the same “Welcome to your exchange rate is…” message to also show which tier you are on, and therefore, clearly show exchange rates and fees.
Tiers could be set up as to which ever percentage/spend bracket covers your costs best - but if the issue is a few people taking advantage of a system at the expense of the rest of the community, then this would level the playing field?
The aim is for all of the options to be broadly the same — covering costs, but not making a profit. This one particularly is hard to model because it can vary alot depending on usage!
If I could choose an option 4 it would be to keep ATM withdrawals abroad free of charge and put a fee of 2% on UK withdrawals for the prepaid card.
Free withdrawals from ATMs abroad is one, if not the most important, of the advantages that Monzo provides as a bank and if that benefit gets revoked I fear that there will be an element of trust which will start to be questioned.
Alternatively, a free-of-charge monthly cap could be a solution too. Transitioning from 0 fees to a 2% fee after the first £500 withdrawal/month could work from a customer (mine, in this case) perspective.
It’s worth noting that this is likely a temporary issue, the world is moving more towards card, NFC and APIs. It seems likely that the need for overseas ATM withdrawals will substantially drop over the next 5 years or so.
It’s also interesting that despite ATM withdrawals outside the EU costing more (roughly twice as much) as those in the EU that in the practical example that @anon91821566 carried out on the blog post the San Francisco withdrawals were actually cheaper than those in Berlin. I assume this is a relatively isolated incident otherwise it seems unfair to potentially charge twice as much for usage outside of Europe.
It’s also a shame that the voting system is first-past-the-post. Since the free allowance option is miles ahead of the other two options then it likely won’t matter in this case but votes with more than two options run the risk of the winner not actually being the most popular option if you’d taken 2nd preferences into account.
Option #3 feels somewhat confusing as the title alone doesn’t make it clear if you’d be charged 3% on the entire monthly amount (say you withdrew £201 for example). Would you be charged 3% on £201 or on £1.
I imagine most people that are withdrawing a large amount from ATMs are doing it on holiday, which means that they are probably spending £400+ for a couple/few weeks. If that is correct, then surely the flat 1.5% fee makes more sense…
It’s a slippery slope once you start paying a monthly fee. And you’d have to be travelling quite a bit to recover the cost of the monthly fee in ATM fees.
