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Monzo bids to cut costs with new fees for ATM withdrawals and lost cards

Monzo bids to cut costs with new fees for ATM withdrawals and lost cards

Monzo is to slap free-loading users with a three percent charge for ATM withdrawals amounting to over £250 per month and a £5 fee for replacing lost cards.

The new charges come as Monzo bids to cut down on costs and drive the business to profitability.

Monzo has won over 4.4 million current account holders since its launch in 2015, , however the firm has been battered by the Covid-19 pandemic, reporting a £113.8 million loss last year and issuing a blunt warning about its ability to continue as a going concern.

Monzo says the new charge sheet will not apply to customers who do most of their banking with the company or avail themselves of its £5 a month premium service Monzo Plus.

In a blog post, the firm explains the rationale behind the new fee structure: "Every time someone takes out cash, we pay the companies that run the cash machines. Right now, around 20% of customers make up more than 80% of our cash machine costs. This means that most of our cash withdrawal costs come from a small minority of customers.

"That’s why we’re asking people who take out lots of cash with us, but could do that for free with their other bank, to contribute towards those costs.
Card replacements

"It’s a similar story with card replacements. Most Monzo customers have never ordered a replacement card, but 1% of Monzo customers order more than one card each year, making up 35% of our total card replacement costs.

"If you need to replace your card because you’ve been the victim of fraud, if it’s been stolen, or if it expires we’ll always replace it for free in the UK. But if you need more cards for another reason, we’ll now ask you to cover that cost in some circumstances."

The changes have generated a typically withering response on Twitter.

Comments: (2)

A Finextra member
A Finextra member 02 September, 2020, 11:39Be the first to give this comment the thumbs up 0 likes

"...use another bank´s atm service that is for free"? So one should as a customer also have an account with money deposited in a "high-street" bank? They are bluntly trying to piggy-back on the services of  "slow incumbent banks with outdated services" regarding their own consumer´s needs. 

A Finextra member
A Finextra member 03 September, 2020, 09:43Be the first to give this comment the thumbs up 0 likes

Not quite - in fact quite the opposite in reading their annoucement: "In the rarer cases where people are using lots of cash or replacing lots of cards, whilst also doing most of their banking elsewhere, we think it’s fair to ask them to cover those costs so our other customers don’t have to"

The cost to serve this small portion of customers is clearly much higher.