Transaction categorisation seems to be quite dumb. I’m not sure of the algorithm, but it looks like it’s based on the merchant group. (i.e. if I mark Sainsburys as “eating out”, because it was buying lunch “out”, my grocery shop ends up being eating out to…)
Could some more variables (e.g. location, size, etc.) be factored in?
Yes your account remembers what category you assigned to your last purchase from each merchant (or merchant group, if they’re part of a chain) & assigns that category to your subsequent transactions, unless you change their category again.
I’m struggling to think of an example where these characteristics (assuming that, that information is even available to Monzo), would help Monzo choose a different category for two of the same merchant’s stores - could you suggest one?
If I buy lunch from a Sainsbury’s on the high street or do my weekly shop in a larger supermaket, I still categorise both purchases as ‘groceries’. I use ‘eating out’ for meals from merchant’s that are more expensive than usual i.e. restaurants, where a cheaper option was also available.
Buying fuel from a supermarket’s petrol station is the only exception I can think of…
Presumably location could come in to differentiate between a supermarket branch in a railway station (eating out) and a ‘normal’ one (groceries). And a £5 shop at Sainsbury’s is more likely to be eating out than a £100 shop which is most likely to be groceries.
But I think there would still be lots of errors with a ‘smarter’ system. And an advantage of the current system is that it’s predictable. I think the larger issue is that we need more flexibility in splitting transactions and custom categories.
Having said that, Monzo are clearly more than capable of spotting patterns in their merchant data, combined with the categories that users set for those merchant’s. So I expect they will improve the way that category assignment works in the future. It would be interesting to hear if they have any specific plans for this at the moment.
Ah - okay. I consider “eating out” to be “any meal which was unnecessarily expensive because I bought it ready-to-eat” - e.g. sandwiches from Sainsburys (as well as the obvious; meals at restaurants etc.).
So, I’d like buying lunch (smaller (less £) transactions and where the store is located a significant distance from home) to be “eating out”, even if it was only £3. However, a £3 transaction at a Sainsburys which is (for example) less than 2 miles from home was probably groceries - perhaps buying bread and milk etc.
I don’t know - it’s possible that I’m an edge case!
On the predictability of categories - perhaps this could be solved by adding a “tentative” flag? (meaning “Monzo automatically put this transaction in this category. If you view the transaction and don’t change it, we’ll assume we were right and remove the tentative flag.”)
I agree that it’s important that Monzo doesn’t do anything “surprising”, but equally I don’t want this to limit how clever Monzo is!
I can totally see where you’re coming from but in my (possibly short sighted) opinion, it seems like it would be quite hard to create rules like that, that work for all users. As we’ve just mentioned, my definition of eating out isn’t the same as yours 
On the plus side though, once Monzo’s API is ready next year, I expect you could use an rule based automation service like IFTTT or Zapier to update your transaction’s categories, based on your own rules…
That’s kind of how the categorisation works already, isn’t it? Monzo automatically chooses a category but if we set a different one for that merchant, Monzo remembers our choice.
A neural network which takes various data about the transaction as inputs (e.g. amount, location (possibly as miles from home), merchant, etc.) and classifies should do a reasonable job, especially after a good sized training set (I’ve got several hundreds of transactions on my account!). I’m hoping to integrate this sort of behaviour into my final year project, time permitting!
But there’s no was to tell the difference between a transaction which I’ve manually categorised and a transaction which Monzo automatically categorised and I haven’t yet checked. I’d find a flag like that really useful - it would help me to keep an eye on things better (and stop the occasional food shop being classified
Or to be able to create custom categories?