Debit Card Interchange Fees during lockdown

As many of you will know, Monzo recently shut its Las Vegas office, reduced headcount in the UK and have taken steps to make support harder to contact (i.e. more reliance on self-help and less support at night)

All these changes, bar the closure of the US office, were blamed on Covid 19 and the need to save costs as debit card use had reduced leading to a fall in interchange revenue earned by Monzo.

As such, I was interested to see the BBC report that debit card spending only fell slightly during April (the first full month) compared to a year ago:

With shops closed, the use of debit cards was down 5.1% in April compared with the same month a year ago.
Contactless payments saw a significant drop, as many people were working from home and making fewer occasional purchases, as well as commuting less.
However, with the limit on contactless payments having risen from £30 to £45 and some shops refusing cash, the average purchase using this technology rose above £10 for the first time.

This compared to an almost 50% fall in credit card spend.

Have to say, given Monzo’s actions I was expecting a lot more than a 5% reduction in debit card spend

You enjoyed that didn’t you?

Not every customer is the same and not all banks will have been effected equally.

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I’m just trying to work out what the purpose of this topic is. Is there a point? A question? An accusation? Or are we doing the “let’s just put some facts together to lead to a narrative” thing?


I’m just surprised the fall in total debit card spend in the UK only decreased relatively slightly.

I would have posted it in an existing thread but couldn’t immediately see a relevant one


"Monzo’s actions " were probably also influenced by having not closed the funding round pre coronavirus shutdown ?


I have just one question. What is the source for the data?

Now to discuss. Correlation does not always mean causation. I read somewhere on these forums that the statistic that matters is frequency, not necessarily the amount. Those statistics say nothing about frequency to draw any accurate conclusion in that regard.

I think it’s clear though, that Monzo’s financial woes started long before COVID-19 arrived, and the timing gave them a convenient excuse (assuming they blamed COVID, I don’t recall if they did or didn’t). As an outsider, the only big impact I suspect they suffered was loss of income from plus, assuming the delay for that was due to COVID, and not other factors.

But yes, the data does support my opinion that COVID should have had minimal if any impact on companies offering digital services that were in no way impeded by the pandemic. Other fintechs appeared to have carried on unaffected financially from what I’ve seen.

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Along with credit card spending, is going to be reduction of short term loans and overdraft usage…

Then add in Covid repayment pauses and you have quite a potential gap.

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It was foreign spend that really impacts Monzo anyway.

The BBC article (linked in my post) quotes UK Finance

While I read somewhere on these forums so that these fees had changed to %'s and not a fee per transaction - in which case its total spend that’s important not the volume of transactions

Agreed, though Monzo doesn’t actually lend much compared to the level of deposits it holds.

Think what you like about changes to chat (I’ve certainly got views) - but where has this been attributed to Covid?

I saw that, but nothing to link directly to the actual data set, so I can see where it was obtained, the sample size, among other meta data.

I thought that’s how it worked it, but I’m not clued in to the ins and outs of it, and a few people told me I was wrong. :man_shrugging:

Sorry just want to point out an amusing comparison. Monzo had financial woes pre COVID and is shifting the blame to the pandemic, but N26’s issues were definitely all brexit related as they said and there was nothing else going on? Just seems a little unfair to think the worst of one and the best of another.


I think its in the notes of their press release:

It will be industry data not a survey

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Remember, everyone always has an agenda and built in bias.

Particularly those who claim not to! :innocent:


I didn’t say that. :roll_eyes:

I don’t even know if they blamed COVID. I merely noted that the timing would have made for a convenient excuse. Only Monzo know if COVID impacted their decision making, just like only N26 know if Brexit impacted theirs. All we can do is speculate.

I don’t want to get into a back and forth so I’m leaving it here, but you literally did that that :rofl:

Regardless, they didn’t use it as an excuse, it’s just been said by staff members on here that the data showed that card spend and frequency was drastically down for Monzo. There may have even been a figure given, but I don’t remember so I’ll leave it for someone to hunt down.

Neither do I, but you conveniently omitted the rest of sentence to fit your narrative here. Please don’t do that. Here’s the sentence in full:

I thought the subtext was clear, in that while Monzo had already planned to focus on revenue generation and covering costs, for the post year, the onset of Covid and the fall in revenue resulted in further actions which were not previously planned (unlike the US closure).

As @iansilversides says no doubt the actions were also influenced by not closing their funding round pre Covid… its just I would have expected a much sharper fall in debit card usage than seems to have been the case.

I wonder if the type of people who use Monzo spend less on credit cards and do most of their spending on the Monzo card instead thus those figures affect other banks more?

Could discretionary spending be done more on credit than debit card, hence the difference?

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