Monzo is much better if you get your salary paid directly into your account or set up a regular standing order from your old-school bank (regular payments make budgeting easier, target-setting better etc), but sometimes we know it’s useful to be able to top-up instantly in an emergency. So we’re bringing back top ups for those times you really need them.
However, unlike bank transfers, this method of adding money to your Monzo account has a processing cost which is out of our control. When averaged out across our entire customer base, debit card top-ups currently cost Monzo around £24 per customer per year. We need to reduce this cost for us to become a sustainable business in the long term.
One way we’re doing this is to provide alternative methods of adding money to your account that don’t cost money. Upgraded accounts support bank transfers and salary payments and we’re also exploring ways to make adding money even smoother, like the Current Account Switch Service, as well as the opportunities that the forthcoming Open Banking initiative offers. Imagine being able to trigger bank transfers from your other bank accounts from within the Monzo app.
However, we’re also beginning to explore ways we could reduce the cost of debit card top ups for us if the above features don’t help. Much like with overseas ATM fees, we’re starting to test some ideas around fees for high usage.
We are trying to stick to these principles when considering options:
- We don’t want to add friction to the new customer experience; it’s important that getting set up is quick, easy and delightful.
- Emergencies happen, so we don’t want to ever totally block the ability to top up with a card.
- We want to find a model that is simple and easy to understand
I joined the team as a user researcher recently, so we’ve begun work with customers to test potential approaches. Today, we wanted to transparently update everyone with what we’ve done so far.
We started off by running a workshop internally where we came up with different possible charging models. As we discussed the pros and cons of each for the customer and for the business, three particular models stood out.
The first model used the concept of a free trial period. The idea is that you are given a few months warning that fees are going to be introduced, which gives you plenty of time to set up alternative methods of transferring money to your Monzo account that don’t incur a fee.
This trial period would also apply to new customers, so they could get used to Monzo before they were charged anything.
The second model used the concept of a monthly allowance, similar to foreign ATM fees. The idea with this one is it would provide you with the option of topping up a small amount via your debit card for convenience, but the limited amount would encourage you to plan ahead and use free methods of transferring money to your Monzo account.
The third model – our wild card – used the concept of tipping, similarly to Wikipedia or The Guardian. Your debit card top-up would be free but you would be asked for a tip by Hot Chip, who animates and get progressively happier the more you give.
We debated. The first model felt the least complicated but somewhat rigid. On the one hand, it might encourage customers to move their salaries across to Monzo but it might also create too much friction if they’re not ready to make the jump and don’t want to keep using their primary bank to feed their Monzo account. On the plus side, it’s straight-forward and easy to understand.
The second model felt more forgiving but added a layer of hassle. Given the recent foreign ATM fees which carry an allowance, we didn’t want to burden our customers with having to remember their limits for different functions.
The third model was our altruistic love-child. We don’t want to charge fees, but we’re operating at a loss and need to cover our costs somehow. Could we rely on the generosity of a few individuals who would provide enough of a tip that would negate a lack of tips from others so we break even? How would people feel about tipping Monzo?
One of our talented product designers –– Vuokko Aro –– put together some design mockups into separate journey prototypes. We ran a number of individual task-based user research interviews with participants, asking them to go through the process of topping-up their account. We observed, probed and listened.
What we learnt was that the trial period model was too restrictive. Participants didn’t notice the explanatory copy and the fee came as a shock when it was imposed. Participants told us that they would keep using the debit card top-ups until they would be charged, and that it sat badly with them. Participants struggled to understand where the fee came from as they assumed that the debit card transfer was the same as a standard bank account, and therefore free of charge.
The tipping model was unrealistic. Although participants reacted positively to animated Hot Chip, they couldn’t see why they would want to tip a bank –– tipping is something reserved for exceptional, personal service and not for something that is expected, least so from a financial organisation. One participant said it made her feel guilty, which is certainly not something we would want to do. All of them skipped the page.
The model that came out as the most favourable for our participants was the monthly free allowance with an ensuing fee. Participants told us that it would encourage them to either move their salary across entirely, or budget and plan larger bank transfers ahead of spending rather than trickling money in small amounts from their legacy account into their Monzo one. This model gave participants more flexibility and control in case of unforeseen situations, which they liked.
Whilst there was a clear preference towards one pricing model in the research sessions, it doesn’t mean we’ve made a decision. This insight gave a us a lot to think about and some more detailed design problems to solve. We’re now going to work on refining our prototypes and seek more input and feedback from the community, whilst seeing how people make use of debit card top ups on the current account alongside bank transfers and the other features we’re building. We won’t be implementing any limits until at least after the New Year.
We hope this post gives some insight into the challenges we’re working through and look forward to hearing your thoughts!
Thanks for reading 
(as usual). It costs us a tiny amount to receive payments, but it’s v small (like, pennies small). So close enough!
but using inter-bank transfers.