Monzo brings back debit card top ups, but warns they may not be sustainable

Source: Monzo

The best way to add money to Monzo is by getting your salary paid straight in or setting up a regular standing order.

If you’ve already upgraded your Monzo account, you’ll have a sort code and account number which you can pass on to your employer, or use to schedule payments from your old bank account to your Monzo one.

When we started rolling out upgraded Monzo accounts to our customers, we did so without one key feature — the ability to top up your account from another debit card, or using Apple Pay or Android Pay.

We know that this feature gives you flexibility, and lets you add money into your Monzo account quickly. It’s also really useful if you’ve just joined Monzo and are just getting started! You can add money to your account without waiting until your next paycheck, and can start using your card straight away 💳

We’ve listened to your feedback and we’re bringing it back! As of today, you can top up your upgraded Monzo account from another debit card, or through Apple Pay and Android Pay.
Topping up

However, supporting this feature is also incredibly expensive for us. Every time you top up from another debit card, Monzo has to pay processing fees, calculated at a percentage of the amount you top up. On average, this costs us around £24 per customer each year.

Having your salary paid in or setting up a standing order from your old bank account both mean that you don’t have to think about adding money to Monzo ad hoc, and are both totally free for us to support.

Because top ups are so expensive, we’d ask you to only use them for last minute emergencies. It isn’t sustainable for us to keep covering the costs if everyone only uses top ups to add money to their Monzo accounts. Our Product team are beginning to explore ways in which we can reduce these costs and they’ve detailed everything over on the forum here. We’d love your thoughts and feedback 😃

Feedback on the upgraded Monzo account has been extremely good so far, and we’re excited to fill in the final missing pieces of the puzzle over the coming weeks!

Comments: (8)

Ketharaman Swaminathan
Ketharaman Swaminathan - GTM360 Marketing Solutions - Pune 01 December, 2017, 16:12Be the first to give this comment the thumbs up 0 likes

With EU debit interchange at 0.5%, what's Monzo really complaining about? Some of these European fintechs should get coached by their Indian counterparts how to negotiate more funding and rising valuation with VC / PE community. India's largest mobile wallet cum payments bank PayTM lets you top up any amount of money free of cost even via credit card @ 2-3% MDR. It still doesn't charge any fees to merchants for collecting payments. It makes whopping losses. Still it keeps raising more and more funds at increasing valuations from one round to another. At the last raise, I believe it was valued at $8B (Source).

A Finextra member
A Finextra member 04 December, 2017, 09:56Be the first to give this comment the thumbs up 0 likes

WP: Sorry Ketharaman - am I missing something here?  Are you saying operating costs should just be picked up by investors, even if that causes the business to be unsustainable?

Ketharaman Swaminathan
Ketharaman Swaminathan - GTM360 Marketing Solutions - Pune 04 December, 2017, 10:45Be the first to give this comment the thumbs up 0 likes

@AnonFinextraMember:

No, you're not missing anything here. According to the prevailing playbook of unicorns / decacorns - at least in USA and India, to name two markets - investor does pick up the VC-funded company's operating costs and the company does make whopping losses e.g. PayTM, Uber, WeWork, et al. The investor becomes the business, which is highly sustainable when measured by standard parameters of a business. The company becomes an asset class measured by different parameters on which it is highly sustainable. More in my blog posts titled When A Business Is VC Funded, VC Is The Business and If You Think VCs Create Bubbles, Meet ICOs (hyperlinks removed to comply with Finextra Community Rules but these posts should appear on top of Google Search results when searched by their titles).

A Finextra member
A Finextra member 04 December, 2017, 11:00Be the first to give this comment the thumbs up 0 likes

Interesting.  So basically you are saying that investors should just ignore the losses and prop up the business until its brand becomes big enough to exit, and hopefully by then, it will be nearing a profit anyway?  I think Monzo have always done that to an extent (they are still pre-revenue), but I guess they are just trying to keep their investors on side.  For every Uber, there are a lot of boo.coms...

Ketharaman Swaminathan
Ketharaman Swaminathan - GTM360 Marketing Solutions - Pune 04 December, 2017, 12:10Be the first to give this comment the thumbs up 0 likes

I don't know about boo.com but, from what I've observed, virtually every unicorn / decacorn has reached where it has by following the same playbook. 

A Finextra member
A Finextra member 04 December, 2017, 12:15Be the first to give this comment the thumbs up 0 likes

Bit of a car crash in the original dot com boom.  There's a great book about it called boo hoo.  I will sign up to your blog too!

A Finextra member
A Finextra member 05 December, 2017, 10:31Be the first to give this comment the thumbs up 0 likes

To be clear, debit interchange does not equal what a merchant pays - you need to pay an acquirer in the mix as well which bumps up the cost considerably.

Monzo will be paying a lot of money every year for regular users of the service - it's good that (along with the foreign ATM piece) they are finally admitting that they need to control these "freebies" and start limiting these high cost items.

Ketharaman Swaminathan
Ketharaman Swaminathan - GTM360 Marketing Solutions - Pune 05 December, 2017, 11:11Be the first to give this comment the thumbs up 0 likes

@AnonFinextraMember:

I know MDR is what Merchant suffers but I also mentioned a figure of 0.5%. The actual figure is only 0.2% (Source:https://www.adyen.com/blog/all-you-need-to-know-about-the-eu-interchange-cap). So, I'm sure the MDR suffered by Monzo is much lower than my 0.5% estimate, even if Monzo allowed top up via credit card.

Anyway, that hair splitting is irrelevant in the current context of comparison with PayTM whose cost is much higher viz. 2-3% MDR. You may have heard that PayTM is on its way to become the world's largest digital bank.

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