They’re not overcharging for anything at the moment, the goal is to simply cover the costs.
My guess is that the reason why they’re not simply passing on the cost of accepting top ups by card is that they pay a lower rate to Stripe, than some other merchants pay for accepting these payments. And since that rate’s commercially sensitive (because if other merchants saw what it was, they’d want it too), Stripe won’t allow them to share what it is. But I could be wrong.
I had similar issue with my employer. I get paid in GBP but payroll team would not accept new bank details without entering IBAN number (even though BACS only require sort code and account numbers). I then used IBAN Calculator website (using Monzo’s sort code, account number and BIC) which generated a dummy IBAN and I was able to update my bank details to get my salary credited into Monzo CA. 
I think your case is different if your employer process salary using IBAN numbers?
My feedback on this would be that there’s absolutely NO WAY I’m transferring my regular payments over to my Monzo account until the issue with retrying them when declined is resolved. Prior to Monzo, I’ve always used more than one account for spending and bills. If Monzo wants to replace both of these, the experience using the app to manage regular payments needs to improve drastically.
At the moment, why would I want to move all my stuff over? It’s harder to manage than online in my current bank account and would leave all my bill money mixed in with spending money. With my current bank, if I make some kind of mistake they warn me to move money in to cover my bills without risking declined payments and late payment fees.
The natural solution to this issue is to make the experience so good that people WANT to use the account all the time. The carrot as opposed to the stick…
I am not sure why do the need stripe at all… can they not integrate with Apple Pay/ Android Pay directly and have in-house processing ( I mean shouldn’t they have that already anyway since they are a bank?!)…
They do but that doesn’t enable you to accept card payments. They’ve effectively set themselves up a merchant for this.
@SamanthaD
Currently…It’s really not. Lack of second account means you’ll neither get me doing anything other then topping up and using for spending, nor will you ever get me an overdraft (so no opportunity to make a profit from me). Therefore my old bank gets this and you just get top ups and disposable spending.
Love Monzo and whilst what you have usually works better then the old bank you’re no way a viable option for me to replace my current account as is. If you had it I’d swap but you don’t.
If you were I wouldn’t be topping up at all, until then that’s all i’d do.
If you charged I’d just use starling instead. Certainly wouldn’t be tipping you either just because your current set up means it’s not viable for me personally to move 100% over.
Think your missing a trick as to understanding why people are topping up at all rather then receiving direct credits.
I agree with you on this point. I can get a better overdraft elsewhere and without a second account, or at least pot sort codes and account numbers, or a new effective way to deal with bills (to separate it from daily/weekly spending), I will not set up my payroll to Monzo.
This is because I use 2 current accounts;
1 account to receive my salary and to pay bills/savings from and transfer a weekly budget to;
1 account to spend money daily (this used to be the prepaid card).
When I first got Monzo I transferred my direct debits over and was about to transfer my salary when I realised because I was switching everything I wasn’t actually using Monzo daily because I was turning it into a billing account. I promptly switched everything back.
I couldn’t agree more.
Monzo offers a convenient way to spend money and to keep a track of that spending, but things like standing orders and direct debits work perfectly well in legacy banks. It would effectively cost me around £25 per month to move my banking to a a bank which doesn’t quite offer the same range of services.
I think Monzo are on the right track, but they’ve only just left the station; the destination is some way off yet.
Right now I’m getting free withdrawals up to a certain amount (something that naturally still costs Monzo some money) and then paying more than it costs for anything beyond that (overcharging) in order to cover Monzo’s initial losses. And now, the same is disused for top ups.
That pricing model has been designed so that they ultimately break even. The cost of the free tier is paid for by the higher fees on transactions that go over that tier. Don’t forget that users chose that pricing model either.
Completely agree with that, hope my initial posts didn’t convey something different.
Great. But in that case I’m not sure what point you were trying to make?
What I’m saying is that instead of getting a free tier and then paying 3x what a service costs for anything beyond that, I’d rather ALWAYS pay what I’m using.
I feel it’s a quite obvious pricing possibility that’s missing from the initial post.
@SamanthaD And just as another point… I frequently top up multiple small amounts to Monzo because the payments tab is so terrible (IMO). I wouldn’t want to mess around trying to get anything back out if I needed/wanted.
Like a few others have said, feels to me like growing pains.
Of course Monzo needs to be sustainable, even while it burns VC cash building its offer.
But at the moment, in some areas, feels like the problem is being aired before the solution. eg debit card topups cost an average of £24 per customer per year. Ouch, when you’ve got no (or little) revenue. But what, if and when the marketplace concept comes live, that a customer is making Monzo £200 per year in marketplace commission? And card payments are making £50 a year and the overdraft is making £100 per a year? Doesn’t look so daunting then, perhaps.
Keeping a keen eye on costs is great for any business, and pleased to see Monzo doing it. But before I go all-in, I’m keen to see how the revenue part of the ledger is going to work for Monzo (and for me), rather than feel ‘guilty’ about the ‘cost’ part that I’m ‘contributing’ to. And, frankly. if a service is worth paying for, I’ll pay for it. I don’t, however, like being ‘shamed’ for doing it.
I dont use the debit card top up feature so this really doesn’t impact me but I do think Monzo are going to run into issues with trying to charge for this whilst you can get it for free with Starling.
I also feel like this might be less of an issue if they addressed some issues with DD/Standing Orders, the data enrichment(e.g. Actual names and not raw data), being able to retry payments like legacy banks do and so on, more people would probably be willing to set them up and thus move more of their money over to Monzo and so rely less on top ups.
I for one would probably move back to my legacy bank if Monzo keep doing “free amount per month” and “pay x amount if you go over that amount” with more and more features
How many “more and more features” can you actually think of to apply this too? I’d struggle to make a list unless you widen it out to all the legacy bank stuff that everyone does.
Honestly I don’t have an specific features in mind and it’s unlikely anything else would fall into this category but my point being, if there does come another feature in the future where it becomes expensive to run due to a certain percentage of users and Monzo adopt this method again it would put me off.
They have done overseas cash withdrawals, now account “top ups” by card, next presumably Monzo.me (as that incurrs similar costs)…in future charges for depositing cash? With all these fees it would be simpler to have a modest monthly charge for the account
It would, but I guess that the people who didn’t make use of the expensive features would baulk at paying for something they didn’t use.
Monzo could end up charging a monthly fee and only keeping customers who want free cash withdrawals, free debit card top ups etc resulting in the small monthly fee becoming a large monthly fee and all of the profitable customers going elsewhere.