The Changes to Debit Card Top Ups thread and previous threads about ATMs and international fees did have me wondering what sort of costs are incurred upon Monzo for accepting/making payments. Obviously, quite a bit will be confidential, but something like:
Receiving a Direct Debit: 1 unit
Making a Direct Debit payment: 0.5 unit
Receiving a top up via card: 10 units
Replacing a card: 50 units
Making a payment on debit card: -2 units
Making a payment on debit card via Android pay: -1.5 units
[i.e. We know if we send money to Monzo, itâll only cost Monzo 1 unit whereas if we were to add money using a debit card itâll be 10 times as much. I wouldnât expect a definition of what a âunitâ is nor âexactâ figures, just guidelines/approximations]
So we, especially us investors who want Monzo to be successful and profitable, can at least try and âdo things in the way that cost Monzo the least amount of moneyâ (such as sending money via a big single direct debit to the account every month instead of lots of little âtop upsâ and get as many companies taking money via debit card - but not Android pay - as possible).
I would be very interested in the relative costs. But⌠if Monzo wants to have millions and eventually one billion customers, thereâs no way they can rely on the few of us who are more involved making the ârightâ decisions to reduce their costs. There has to be a structure that is profitable on the whole, so that individual decisions you or I might make have no impact on overall financial viability, even if a single decision might cost Monzo more. Once they get to the scale they want, whether a few of us are consistently making lowest-cost decisions or not will make effectively no difference.
The other concern I have, is I donât want to feel guilty for using a feature (like Apple Pay), and so things should either be part of the core product and free to use as I want, or charged for outright.
As I say, though, Iâm still interested in what the relative costs are, but Iâm not sure we can use them for much that will affect Monzo long term.
As an investor as well, I canât help thinking itâs too big a leap for the general public to âhelp their bankâ. I think most of the population are looking for banks that help them, which is fair enough. I would expect, over time, that the answer will be to either phase out topups, or charge for them as they become edge cases when most people are getting their salary paid in. The really clever bit is Monzo.me, especially when coupled with bill splitting. Thatâs a very powerful tool which doesnât have an obvious alternative. Itâs a great USP (especially against legacy banks) and I would hope that it can be funded from overdraft interest and other revenue streams in the future. It is not only brilliant to use, but also good when you donât want to give everyone your bank details, for example on a stag weekend when there are lots of people and some you may never see again. Paym might also help here, but even after five years, I actually know very few who are signed up.