Options 1 and 2 don’t lose the travel friendly marketing entirely, as using the card at POS is still the same as it ever was.
Speaking for myself, I’ve never used any of my cards to withdraw cash from an ATM when I’ve been abroad, I’ve always sorted out any physical foreign money I’d need before travelling.
Whichever option Monzo go for, I wonder if they could supplement it with an incredibly straightforward travel guide - in that you say you’re going to country X and the guide says if the country widely accepts Mastercard at POS or if you need cash, and perhaps encourages you to arrange it before leaving the UK.
For the record, I’m very much in the minority as I voted for the 1.5% option, because it’s the most straightforward and easy to remember for me. It’s also one of the two options that strongly encourages the card to be used at POS rather than an ATM, which to me makes a great deal of sense - a big driver behind my getting a Monzo card was wanting to become cashless. Though I accept that there are countries out there which don’t take Mastercard at POS and therefore my experience is somewhat limited.
While Option 3 is most beneficial for me (I don’t use ATMs abroad much), it doesn’t seem as sustainable or fair as option 1.
Fairness
In both the poll and the comments it seems that most people, like me, would be best off having a low monthly (or yearly) charge-free allowance. In this scenario, Monzo will keep absorbing the ATM costs for the majority of users, but only up to a certain amount. These costs (I’m assuming!) are offset by heavy users who pay a larger 3% when they go over the allowance.
This is where the unfairness comes in: why should members of the community who use the card mostly abroad be paying more fees than they actually incur? Are they paying for everyone’s ATM spend? It feels like this option is designed to discourage people from using the card this way, or even to discourage them from using Monzo at all.
Sustainability
That brings us to sustainability. Users who currently take out more than £200/month from ATMs outside the UK might not be so keen on continuing to use Monzo if they have to pay (an above actual rate) 3% fee over (some of) it. If these users disappear (either through switching service or through changing their ATM usage), Monzo will be left absorbing most of the ATM fees once more.
In conclusion, I think the fairest and most sustainable way to deal with this is to pass on the ATM costs to the user as directly as possible. If a system with free allowances + a higher rate is implemented, the majority of people might end up paying nothing, while a small part of the community will be disproportionally affected (i.e. they end up paying more than what they’ve actually incurred).
To me it seems the fairest of the three options offered as no-one subsidises anyone else. However, if when abroad, the ATM user is charged the exact ATM fee then that would be even more fair. Option three is reasonably attractive but for most users who only go abroad a couple of times a year they will lose out and subsidise the frequent travelers.
I would offer option FOUR which gives around £500 free per year and then charges an increasing percentage thereafter as this would attract the reasonable user and charge fairly the high user.
It feels like this option is designed to discourage people from using the card this way
Well, yes. It’s designed to encourage them to use the card at POS instead of at an ATM.
As for discouraging using them from using Monzo at all, there won’t be a great many alternatives. Even the less advantageous suggested rates would appear to be better than most other available options.
My preference is Option 3… I’ve also read a bunch of the comments written in this thread and I think there’s a really good hybrid idea, that might work. Don’t forget it’s only ATM withdrawals…
Having a limit of £200 withdrawal per month is reasonable, it stops free-of-charge overuse. You could make it a slightly higher interest rate of 4% if you go over this limit.
Then, in addition to the above, you could provide an in-app purchase of 1 month (up to £1500) for less than it would cost you to withdraw that amount without pre-purchasing.
For example, withdrawing £1500 ad hoc would incur charges of £60 (4%). However, the option to pre-purchase would mean withdrawing up-to £1500 would cost only £45 (3%). If you went over this, the 4% would come back into play.
This way you could plan your holiday in advance and simply pay enough to cover your usage. If you don’t pre-purchase or go over the £1500 limit, you get charged 4%.
This is all really great feedback! I had a hunch myself that Option 3 would be the most popular, but the fact is, this was always going to be contentious and there’s simply no way to please everyone. That’s why it’s so important that ultimately this decision comes down to you guys.
One thing I will say : the stats do very much show that it’s a small minority of people who are running up the vast majority of these costs. I think that’s why Option 3 is getting the most votes, because the vast majority of people are realising that this doesn’t, or won’t, affect them. I think for some people, there’s a fear of the unknown and at this stage their fears are largely hypothetical. I was in the US for a few weeks earlier this year - I only ended up needing to withdraw a small amount of cash, probably around or slightly lower than £200, so under the proposed buffer. And this trip was longer than the holidays that people generally take. Anecdotal, so obviously take with a grain of salt, but it’s fairly clear that cash-based economies are on the outs, and in a few years, it’ll be very unlikely that you’ll be unable to make card purchases in most places.
If you take out the “what if i’m abroad at some point and need to take out £x” people from the equation, and you are then left with the people who actually are abroad, potentially in cash-based economies, for more than a few weeks at a time - then that’s clearly the same group of people who are generating the most costs. Sure - the 3% could be argued to subsidise the majority, but it’s also subsidising the £200 buffer.
That’s just my personal feeling on the matter - the nature of this decision is that people are going to disagree, both here in the company and in our customer base! Just weighing in with my own thoughts like everyone else, they don’t hold any more or less weight just cuz I work here
So whilst this is clearly a topic that everyone is passionate about, it’s important to think about perspective - I think it’s reasonable enough to try and find an approach that is helpful to the largest amount of people. Our aim isn’t to be a travel card, and although there are a minority of people that use us in that way, it’s not what we’re trying to be and it’s fairly clear that that isn’t a sustainable business model.
After spending quite some time thinking about which option is best, I’m probably more conflicted now than I was before!
Some of my main thought are:
One of the key statistics is that “13% of customers account for more than 85% of our total ATM costs in any given month”. It seems reasonable and sensible then, for the other 87% to not be effected in this new pricing scheme. Options 1 and 2 will instantly effect this 87%, despite them not being much of a concern in the first place.
The different options have very different outcomes depending on how someone would use it. For example: If you were going on holiday to Europe for a week or two, its likely that option 3 would work well for you. It’s unlikely that you’d have to pay much at all. However, more than £300 and option 1 quickly becomes the cheapest. But then again, how much do you need to take out for a 1-2 weeks in Europe?
Another example would be someone travelling outside of Europe, which would typically last longer than a trip to Europe, lets say a couple of months backpacking. In this example, you might need a bit more money. In this case any more than £400 and option 2 starts to become the best option very quickly, and option 3 does get pretty expensive pretty quickly. E.g. To withdraw £2000: option 1 = £40, option 2 = £30, option 3 = £54 (nearly double option 2)
After reading through the other comments it seems VERY clear that majority of people who voted for option 3 would rather is was an annual limit, rather than the monthly limit. I think it also seems clear that people would accept an annual limit of less than £1200 (£200 x 12 months), if it meant making this annual limit possible.
It is a real shame if instead of going for a fair option of 1% Europe and 2% Rest of World to cover the approx 1% and 2% costs Tom said you have, instead you go for a poll which may result in someone incurring 1% cost to Monzo but being charged more possibly subsidizing others.
that would be sufficient cause for me to use Starling as my primary account and relegate Monzo to a spare account…shame.
As mentioned, then you’d consider the 3% to also be subsidising the £200 free buffer that you’ve had. Therefore it really comes down to how much you withdraw. If you withdrew £300, then you’d be charged a 3% fee on that extra £100 only, so £3 for £300, which brings it back down to 1%.
I don’t think it’s worth bringing competitors into this discussion unless they are already at a size where they’ve had to tackle this problem. I doubt that Starling, or anyone else, plan on eating up these fees themselves once they reach 250k+ users. If they plan on doing that long term, with hundreds of thousands of customers, then I’ll tip my hat to them! The most likely scenario there is that they’ll come to a decision, just like we are going to have to do… and whatever that decision is, some people will be happy with it, and others won’t be.
For me personally, I don’t think a £200 allowance would be of use…I like to travel for long periods and go to different places, so this allowance would make withdrawals really expensive. I like to be as cashless as possible, but it’s really not an option in some places. However, I recognise my needs are not necessarily the needs of the group! I still think an annual allowance would be more suitable for a lot of people as I do think that most people go on holiday once or twice a year with more than £200 to spend.
A possibility could be a low rate for a larger allowance, say 0.5% on £2500/year, and then an increased rate afterwards, maybe 3-4% so only the bigger spenders are paying back more. A system where the better off help out the worse off. Imagine!
I’ve gone with option 1. This is a call the Monzo leadership will have to make based on the direction they want to take things in. Some of your customers are UK based and travel occasionally; others are regular or even permanent travellers. It will be quite hard to create a fee structure that caters to all groups in a way that is objectively fair.
My suggestion is to create different options. I would be happy to pay a monthly fee for unlimited ATM withdrawals worldwide. I’m sure there are others who would be happy to fit within certain parameters in order to avoid fees. I hope this is a workable suggestion.
On a side note, if you do create some kind of premium option that involves a monthly fee, I’d also suggest raising some of the current limits. The max single card payment and ATM withdrawal limits are currently woeful.
Yep. Don’t like the monetary buffer either. Due the way charges are calculated it would be better to be based on the number of withdrawals rather than an amount and perhaps allow a certain number of withdrawals per month rather than a set amount. It is my understanding that it would cost Monzo more if a user withdraws £10 equivalent 20 times than £200 on one occassion, the proposed formula does not take that into account
We don’t need to create a premium account to improve the limit system, this will happen with the full current account launch anyway. The only reason the limits are quite rigid right now is because we work with different partners on the prepaid scheme and they have to be agreed to in advance. We anticipate flexibility in the future
To be honest my initial reason for getting a Monzo card was just to reduce my ATM costs for a recent holiday in Greece, the main attraction being the fair exchange rate. I also used it a few times for purchases during the same holiday. To be fair I wasn’t planning to use it after the holiday, but now find that I am using it regularly for online transactions in dollars as the exchange rate beats Paypal every time. I am sure I will use it more and more often for UK purchases too as my confidence in it grows.
If you can find a way to charge the user the exact ATM fee when abroad, that would be fair for everyone as everyone already gains over other cards due to the attractive exchange rate and no usage group would be subsidising another.
However if you decide on option three, I would suggest a YEARLY free limit of say £500 and ramping fees after that. With that option the heavy ATM user would pay their fair share without causing the low end foreign ATM user to quit Monzo.
Thanks for clarifying, Simon. I’m very eager to have a current account ASAP in that case. I’ve already put my request in to have the beta version now.
As to the ATM issue, I still would favour any measure that could provide unlimited ATM withdrawals worldwide for a monthly fee.
In terms of an immediate solution based on the options provided, I have changed my response to the poll to option 3 provided that this can be converted into a £2400 annual limit rather than a £200 monthly limit (as has been suggested by some others already).
totally agree. i’d rather pay 20£ once a year and then use the card with no fee. It could be offered as a Premium option, where people willing to pay would have the feature and the rest will go with option 3
To be honest, I think this poll needs more than those 3 options.
Like why didn’t you ask for ideas and then put the ideas for vote? Because I unless a new poll is started all the ideas will be useless.
If there was an option 4, my option would be a simple one:
For those who use the Current Account like a proper account, ie Salary in and use it day to day in the UK. they get the perks of Monzo which include the free ATM withdrawals aboard for travel.
To ensure no abuse, there must be a salary threshold (say £1,000) a month at least in the UK before the perk is available, and it’s limited up to a number of transactions (say 10 Withdrawals a year MAX or something). Once threshold for usage is hit, charge them the costs like normal. For those who don’t hit the salary threshold also just charge them base costs.
Rest assured I know there may be some use cases where people can’t hit a Salary of £1,000 a month, and they properly wouldnt be going aboard with that level of income UNLESS they are students in which case just allow a valid Student Card to automatically qualify them (ie Student Account for X years).
This whole conversation and poll seems to be founded on the fact that a lot of people took out a Monzo card with the sole purpose to use it for Travel and not as a Bank Account. Those users aren’t playing fairly and they know it and reading some of the comments where they threaten to leave if the charges come in, all I say is good - please do move on. The problem you now have is there was a nice Perk for us Monzo users to use when on holiday which is effectively getting taken away because a select group of people abused the system while not actually intending to be banking customers.
There’s no such thing as a free lunch. People need to realise this. Monzo is NOT in the business of money travel cards but to be a bank account.
I wish there was a way you could keep the service for those who play fair, are legit banking customers and only use it occasionally.
Some great and interesting ideas going here - option 3 for my vote but for option 4 I’d agree with others that if you use your card in the U.K. ‘regularly’ once ‘regularly’ has been defined then after the £200 limit has been reached option 1 comes into force.
Not just students but those on National Minimum Wage, National Living Wage, Apprenticeships, part time jobs, seasonal jobs, job shares, zero hour contracts etc…
