I concur. Giving people options would be fantastic. Of course people would choose the one to pay the least but if it’s going to make them pay anyway, they will choose the fairest deal.
Despite being a long-term traveller I absolutely agree to pay fair share, even though I don’t take cash that often (hotels, accommodation, local shopping)
To me Option 3 will not get you (Monzo) the stability you’re seeking, whether it’s monthly or yearly limit, but at the same time I understand people not wanting to pay for the top % of people generating the cost.
Tough decision Monzo! Make it simple, make it “customisable” to cater for the whole range of your audience…
That’s what some of us are trying to get across to the people jumping at the word ‘free’. It’s just pushing the cost to those withdrawing more.
But let’s say you give a £1k allowance, annual. That’s up to £20 (2%) you need to generate somewhere. At 3%, someone needs to spend an additional £666 on top of the allowance to make it add up. The higher the limit, the less likely people are to overspend.
You might be disappointed if they said an annual limit of £300 RotW / £600 Europe, which is the what £6 they spent last July gets you.
I feel like you’re missing the point of what Monzo is trying to do here. Was “travel card with free international ATM withdrawals” ever used as official marketing? The prepaid offering is really not important here, they’re trying to build a good current account. The prepaid card was great to test the applications and build infrastructure but it was never the end goal and the team were transparent about that throughout.
You are probably right however if the reason you offer £200 per month is that you don’t expect people to use it I’m sorry to say that in that case the offer of option 3 is a “con”.
I vote for option 1: 1% in Europe and 2% elsewhere
Initially option 3 seemed best (free £200 - why not?!) but then I thought about when I actually needed cash on holidays and agree with some of the others on this post - you just don’t need the cash in Europe.
It’s countries where the banking system isn’t as good or where money is still king that you’d need to withdraw cash - and those are (mostly) outside Europe. That’s why I think the cheapest levy on worldwide cash withdrawals would be best: option 2, which is also the clearest and simplest. And at 1.5%, that’s small enough that I’d be willing to just pay it for the convenience of still using Monzo abroad rather than taking a stack of travel cards with me.
There are not only banking type costs under the control of ATM owner operators and networks but telecoms charges they face which outside their control so part of those telcom related charges have to be factored into the bank to bank charges so it can never be free unless cross subsidized by the bank receiving the charges covering them for their customers with revenue from other streams
If, as you say, the increased ATM costs are spiralling out of control because people are taking out the card, withdrawing cash for free abroad, then ditching the card on their return, could you not put charges on for the first year, then either a very reduced cost or free transactions thereafter. I think you would see quite a reduction. It didn’t help your cause when the free ATM withdrawal system was shared with the country on the Martin Lewis Money Programme
But at the same time, those asking for an annual limit are (like myself) mostly suggesting a lesser amount than 12 x 200. I’ve suggested 1500, but which is nearly a thousand pounds less than a person could theoretically get for free if they travel frequently and use Monzo for the first 200 they take out each month before moving onto another card/bank/method.
And even then the vast majority would not get anywhere near that 1500 limit, so it’s not going to cost Monzo that much in most cases. The reason for suggesting an annual limit is just that 200 per month is deemed to be too low for practical purposes in a given month if you want to stay fee free, and a higher threshold gives more peace of mind. An alternative might be a higher monthly limit, something actually practical and not, seemingly, designed to be exceeded.
Whether one likes it or not, staying fee free is the prime motivation for many people for getting involved with Monzo and similar providers. I get that there are some serious spenders and money-wise folk here who are happy to pay a percentage commission - in fact, actually want to pay it - but let’s be honest many people, maybe most, are here to benefit from the fee-free access to money abroad. Things are sufficiently tight for many of us to make that saving worthwhile. Another poster here has called us freeloaders, but no-one forced Monzo to offer fee-free access to money worldwide. They chose to offer it as a major selling point, to gain customers quickly, and many people responded. Now that selling point is going to be removed.
I was not bait and switch. Monzo’s focus was on value POS overseas and the fact you were beta-ing a current account app prior to launch, it was Martin Lewis’s site etc that shifted focus to ATM use and mislead people into thinking it was a travel card. Their write up did not make clear it was not a travel card but testing bank systems
‘Fee free’ translates to ‘at cost’ to Monzo. It’s unsustainable given grown projections. Monthly limits will go a long way to mitigate those loses and weed out the long-term travel card users.
I agree with what you say and your last sentence is exactly what I am suggesting: a cross border, industry wide commitment to making access to one’s own money free at the point of access, subsidized/offset by profits from other products and premium features.
I can see why such a system was difficult in the past, but these days, with money being a fungible asset, the infrastructure and tech largely in place and ever-improving and the electronic nature of banking and money movement, it’s entirely doable. As I said, it’s what UK banks already do. They’ve pretty much agreed among themselves that access to money will be free via ATMs within the UK, regardless of the costs of running ATMs.
I’m no expert by any means but it seems to me that free access to cash as an industry standard, worldwide, would be beneficial to banks in the sense that people would place/save more money in bank accounts in order to be able to access it wherever they are (rather than using it to buy foreign money from Bureaux de Changes etc), and generally put banks more in the driving seat over travel exchange firms, thus allowing them to then sell us more services, premium features etc.
But I might well be well off the mark; as I say I’m no expert about the sector
Just to be clear I wasn’t accusing Monzo of bait and switch; they are genuinely lovely people in my experience, I just meant that it feels a bit like that for many of us who felt that we had, at last, found a good, reliable, workable solution to fee-free access to our money wherever we are in the world. We had just got used to Monzo being the answer; and many of us, myself, included, have evangelised about it relentlessly ( I’ve lost count as to how many people I have got to sign up due to my constant singing of praises) only for it to stop being that answer. And pretty quickly, too.
I get your point that Martin Lewis et al foregrounded that fee-free access part of it, but still, they could only do that because it was there. It was clearly a selling point, an enticement for new customers. Monzo didn’t offer zero fees for no reason.
And serious question: I’m pretty hazy in my grasp of the salient facts so what other unique, or at least major, selling points do Monzo have over and above the competition, to make sticking with them a no-brainer once the fee-free access goes? Apart, of course, from being thoroughly good chaps?
Two points: firstly, is it really unsustainable? Presumably Monzo can make money from us with other products and features, while retaining a wide customer base with the MSP of zero fees.
And secondly, why would we want to ‘weed out’ travel card users? Surely it’s better to turn them into more active long-term customers, who start to use other products and services over time?
How about passing the actual foreign ATM fee to the customer (my Thai bank account does that), rather than a flat % fee - that is the most transparent way to do it?
I have voted for option 2. As a backpacker it is the best option for me cash is king in Asia. I would suggest option 4 having two different accounts as currently option 3 is in the lead have that for the everyday user, whilst having the lowest possible interest for a traveller account. To fund this maybe have a minimum balance required or monthly fee. If option 3 wins the £200 free withdrawal will get abused, only using the free allowance before using other bank cards. This would undermine the whole point. I totally agree that u should not have to bear the costs however a fair fee is understandable. Don’t be like the other banks!
Greece is improving dramatically in terms of card useage and availability. Possibly given now it is a legal requirement to accept cards. I Greece and feel when there is less reliance on cash it will start to improve their economy.
So firstly I’m not a current customer, but was just about to become one when I found the post on your blog. Big attraction of Monzo is that you look neat and transparent with a business model that isn’t rooted in the last century. An important manifestation of this is fee free withdrawals and if I’m honest was the thing that was about to make me overcome inertia to sign up.
It is a pain point with all of my current cards bar one (that card gives totally fee free European withdrawals but has a different pain point). This isn’t because I do vast amounts of transactions by value, but just that I feel utterly ripped off when I do, so waste time making life harder than it should be by collecting currency in advance which is a total anachronism in 2017.
If I was to vote for any of those options it would be (1) under the KISS principle and matching fees to costs to avoid cross subsidy or incentivising particular behaviours.
I very much don’t like any of the Free (up to a certain limit, terms and conditions apply, lots of small print) type options as these aren’t transparent and would always leave me wondering whether I had hit a threshold on a particular transaction.
My only question would be: are your costs flat rate per transaction or based on a %age of the transaction (or both).
Favoured option 4 would be a flat rate per transaction of say EUR 1.00/USD 5.00. That way I can modify my behaviour to minimise the costs (hopefully to both of us) by making a smaller number of larger withdrawals when outside the country.
Option 3 makes the most sense. As you say, only 13% of users are racking up the unsustainable costs to Monzo by insisting on using cash overseas when its simpler and more cost effective to use the card at point of sale. Everything about Monzo is so brilliant and elegant so far, and that is what has attracted users. No fees is a big factor of this. So ensure where you do start charging fees it is targeted to where your key loss is. This is why charging everyone generally is not a good idea, it takes away from Monzo’s original concept. Most people should still be able to use it the way it was when they signed up. Those that take out too much cash at ATM’s overseas (over £200) will need to start contributing to the burden that they are creating. Nudge those people that are doing unsustainable behaviours to start using the card in the way it was intended and that is sustainable. That is fair.
Greece and feel when there is less reliance on cash it will start to improve their economy.