Our ATM costs tend to be a percentage of the money you withdraw. That’s why it doesn’t make a difference if you withdraw £1000 in one go, or in small £50 withdrawals.
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That’s just poor business. Many startups go out of business because they don’t consider the cost cutting early on - why operate at a cost when they already have a large number of users registered etc?
Sure, they want to increase growth of customers, but considering the queue to join is still 20k+ I’d imagine they’re not struggling to grow their user base.
Also, while this is still in BETA, this is the ideal time for these changes … not down the line.
Longevity of a bank is the requirement, they’re not interested in trying to sell up, or sell out - so don’t see why they’d be taking the standard “startup” route.
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Hi, Guilty as charged (or not charged 
)
I admit to being one of those who got Monzo specifically for its free ATM abroad. Lets face it you push something as free you shouldn’t be surprised that loads sign up specifically for that use case.
What I didn’t realise is that this was unsustainable without me using the card in UK - it was never stated in the conditions (well, not strongly enough that I noticed it)
If you need UK usage to cover the abroad usage then this needs to be made clearer - I would happily use in UK - just didn’t know I had to.
So I would go for the suggested option of reducing fees for “regular” usage - of course you’ll have to specify this - but that’s only similar to other banks who offer great deals and say “You must deposit £1500 a month” etc etc.
That would be my easy option - “For every £X a month you deposit we’ll knock 0.5% off the ATM fee” - you’ll know the figures that would result in 0% being profitable - by forcing the deposits you then “force” UK usage?
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Withdrawal is usually the last option I would use in case the merchants don’t accept cards or just for a safety cash in the pocket. A limit on withdrawal is fairer than blanket charging.
Fully agree! £1.50 a month would cover it.
Willwick, I personally have not experienced that but if that’s is the case then maybe a average low flat rate is best then. Customers still get a good rate (way below competitors) and Monzo are not out of pocket so much.
You make a good point - and a pretty funny one. There’s definitely an irony in there. Perhaps, though, you can see it through a different lens. Every startup does the minimum possible to get to market, and cuts a few corners. I’ve seen it first-hand, myself. As the startup grows those cut corners need to be rounded off and the full product fleshed out. I think that’s where Monzo are at the moment. So while it does look indistinguishable from a loss-leading strategy (and they picked up a fair few VC-round-bolstering users along the way…), I think when you look at what they have communicated to us, they have made it clear that they want to operate a business which is free of that kind duplicitous strategy. And that’s very different from the established business which focusses on these strategies as a way to do long-term business.
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I’d not pay £1.50 a month for the privilege of just withdrawing cash abroad, which I don’t do… Since March 2016 when I joined, it’d be a cost of roughly £28.50, which would mean to withdraw my ~€200 in that time abroad, I’d pay nearly 15%.
People who infrequently withdraw abroad shouldn’t be penalised for those that frequently do it. Which is why the £200/month limit works well.
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My preferred Option 4 would be to keep ATM withdrawals abroad free if the Monzo account is in credit to defined amount say £100.
As I mentioned above, adding a monthly fee only covers ~x66 of the cost per month.
If withdrawing £500 once costs £7.50 (1.5%) you would need to pay for 5 months at £1.50 before Monzo make the money back.
My initial reaction is that Option 3 - £200 monthly limit then 3% thereafter - is the best way of not penalising lower-spending travellers. You’d have to withdraw some serious cash each month to beat the rates you get with legacy banks even with the 3% above £200. Also I am assuming Monzo has done the forecasting and can absorb the cost of people gaming this option.
Monzo have offered up 3 options to mitigate the ever-increasing fees it’s incurring for foreign ATM withdrawals. Clearly they’ve looked at the data and come up with 3 very simple solutions to tackle the problem.
Not one option will suit all, however option 3 is currently the clear favourite yet I feel this is the riskiest option for Monzo as users will adapt their ATM withdrawals to maximize the fee-free limit before moving on to another card to avoid the 3% charge. Personally option 3 suits me best, however I doubt Monzo will be able to sustain this option by this time next year when it will probably have more than 1 million accounts.
Plenty of option 4s have been submitted however most don’t seem to take into account the costs to Monzo, or the complexity and/or divisiveness of these ideas. Monzo is aiming to keep things simple, inclusive and fair to all, as well as looking to turn a profit in the coming years.
Reading these posts it appears that the prepay card has widely been looked upon as a travel card and I can’t blame users for taking advantage of the great deals it offers to overseas travelers, however it was always going to be a temporary thing, growing its user base, showing what’s missing from legacy banks, while putting its systems to the test before the launch of current accounts. If losing fee-free foreign ATM withdrawals is a deal-breaker for continuing to Bank with Monzo, other options are available.
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A small proportion of customers generate a large proportion of the costs
Just 13% of customers account for more than 85% of our total ATM costs in any given month. Many of these people signed up to Monzo because of the great exchange rates and fee-free ATM withdrawals abroad, but don’t keep the card once they’re back in the UK. If we continue down this path, the majority of customers would end up supporting a small minority who benefit from the card’s rates, while not necessarily engaging with the wider benefits of Monzo.
We don’t think that’s fair. We want to find a solution that benefits the Monzo community as a whole.
Firstly important to say I love Monzo. I love the mission you’re on and how you’re going about it. Transparency unlike I’ve seen from virtually any other company. I’m really rooting for you!
However in the spirit of transparency this paragraph grated slightly with me, and I think you need to be a little careful with this sort of rhetoric.
At the moment, I am one of these customers. I use Monzo abroad partly because of the zero fees but also because of other features like being able to instantly see the currency conversion on purchases. I love it and have recommended it to others. (Note I also have a zero fee card with my bank.)
I don’t use Monzo regularly in the UK because at the moment the value proposition isn’t quite high enough to warrant carrying the extra card in my wallet, and remembering to top up the account. I’m not a deal hunter and I’m not meaning to be unfair to your other customers or cause you costs that you can’t recuperate.
As soon as the product is more fully featured in the UK this will probably change. I can’t wait to see your current account product. But in the meantime I don’t think I should be made to feel guilty for using the card abroad. It’s still in BETA after all, and I used to feel like I was still contributing to the success of the trial.
I’m sure this wasn’t your intention, but if 13% of your customers are in this bucket then it’s probably worth considering.
By the way, I’m not too fussed about the fees so long as you’re transparent and I can make a call on whether I consider it worth the cost at the time.
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Let’s be honest, the issue here is that as usual most of us are sensible but some people will always milk the system.
Option 3 gets closer to addressing that issue so gets my vote; the first two just make everybody pay for the high users (although Option 2 is nice and simple).
However, I think 3% just looks too high and could drive people away - actually is that the secret plan as it would probably be those causing the problem?
Could the bank make it work with 2%?
If you go on holiday twelve a year and withdraw £2400 (£200 each) this will then cost Monzo around £50 (Based on the charges to them been 2%) yet you wont contribute anything to this.
Why does this seem so hard for some people to grasp?
If the numbers are right and a minority of users are “abusing” Monzo, presumably by living abroad (after obtaining a Monzo card in the UK), I would suggest that in addition to the first £200/month fee free, to have this amount (or the remainder of it) carried over up to a maximum of 3 to 6 months. That way ordinary UK-based users who occasionally travel abroad and use Monzo for withdrawals, are not “punished” for the misuse of a “small minority” as you have put it.
Quick comparison of the fees below, personally I would prefer option 1, it becomes more economical for withdrawals over £300 in Europe and for the sake of a couple of quid makes a lot of sense. The fees for option 3 really sky-rocket above this.
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What indeed could be the reason to retain Monzo now? Their closest competitor, Revolut, seems to have a better ATM offer and interbank rates.
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Doesn’t revolut charge for withdrawals over £200? And a higher rate on some days?
This chart is great. Nice one.