None of these branchless banks are a sensible choice for someone who handles a lot of cash.
At least now monzo have a way support users who receive cash occasionally. For them, and particularly when compared to some banks forex fees, the odd £1 charge for paying cash occasionally isn’t too bad imo. Cash is expensive to handle so I don’t think it’s unreasonable.
Should they have adopted a different pricing model? Free for your first 10 cash pay ins per year? Maybe.
Should they have absorbed the cost? I’m not sure. There’s no moral reason to do this but commercially it might have made sense to win over a different type of customer. The danger is they end up supporting users who pay cash in every day and cost them a fortune.
I don’t feel strongly about any of this tho. The fact is that monzo customers now have a reliable way of paying in cash, and that’s a good thing.
I don’t agree with the notion that it isn’t a cost they can absorb. The whole point of app based banks is they’re supposed to be able to offer customers more than traditional banks on account of their vastly lower cost base.
It’s likely still valid for the big four. The argument for smaller outfits was always that they had to absorb whatever the cost was if they wanted to operate nationally.
When you pay cash into your current account, the bank gets to earn interest on that cash (mostly by lending it out). However, Monzo double-dips and charges you £1 every time. Starling on the other hand lets you pay in £1000 per year and 0.7% after that first £1000.
For people who only occasionally receive cash, the Starling offering seems much fairer.
No, it used to be the case with cash withdrawals via LINK that the scheme would make it viable to be overall revenue neutral or even profitable while accepting member group LINK cards.
The argument doesn’t apply to deposits at all - deposits aren’t supported by LINK and there is no ability to use one banking group’s machine to deposit for another; as such there is no way a bank could offset the cost.
High street banks can easily justify it because the occasional cost (per customer) of a deposit is orders of magnitude less than providing a branch to service that same community of customers. It shouldn’t scan that a bank who’ve never had that cost couldn’t afford it for equivalent services tho.
It could be argued its not fair for people who never deposit cash as Starling can’t use the money its spending absorbing post office costs on something that benefits non-cash customers. I know Starling’s approach here is more in line with normal practice but this is the argument Monzo could make to justify their approach of passing costs onto the (presumably) relatively small portion of customers who will make cash deposits.
I disagree with your definition of fairness, unless you’re advocating for banks to hand on literally all the many occasional charges they’re on the hook for? I.e. contact support, card issuance, cheque deposit, faster payments/standing orders, fraud/chargebacks - these aren’t free to current account providers either… it’d essentially make free banking an impossibility.
With any financial product there will always be some customers who will be more profitable by whatever measure than others - that’s not a ‘fairness’ issue tho.
Fairness for the customer is knowing their bank will deal with the occasional stuff which costs them money on the mutual understanding that money will be made elsewhere. FUP/limits would be one thing, but charging for every deposit over the same counter where all* their competitors allow a reasonable amount of free deposits is a bad look.
(* excluding Nationwide, Chase and Kroo, obviously)
Isn’t that essentially what Triodos do with the monthly account fee? And if you were to ask me who offers the fairest approach, my answer would almost always be Triodos.
I’m not personally keen on that mutual understanding thing, myself. I don’t think that’s fair, at least not for everyone. I think it’s a good deal for those who can avoid not being screwed over by that bargain (more so if they can profit from it, even), but it definitely isn’t for those who get trapped by it.
I’m not particularly irked by Monzo passing the cost on. It’s the restrictive limits I’m less keen on. I think the fee is fair, and compared to other banks who absorb it, understandable why they’d pass it on. That mutual understanding isn’t quite as extensive with Monzo as it is with bigger banks and deposits aren’t a core essential for their primary customer, whereas it usually is for their high street competitors and serves as a drop in replacement for the closure of branches. Not absorbing the cost of costly facilities like this are a substantial part of why the cost base of neobanks is lower too.
So absorbing that cost makes little sense for a bank like Monzo to me. Better for them to absorb costs elsewhere, I think, for services most of their customers actually need and use so they can continue to outcompete the big guys.
The whole point of app based digital banks is they’re supposed to be able to offer customers more than traditional banks on account of their vastly lower cost base them doing away with older technologies. It’s for this reason that I’m not overly fussed when legacy features come with a small charge.
None of this is to say that you’re wrong. I don’t think there’s a right or wrong about any of this. It’s very much down to commercial decisions and personal preferences and, as it happens, I think you’re probably right to an extent. It would’ve looked better, imo, if Monzo had at least absorbed some of the costs (e.g. first x pay ins are free, or first £x free).
No, just deposits. Withdrawing cash has never had the same accessibility issue for digital banks that paying in has, thanks to the prevalence of fee-free ATMs in far more places than there are post offices or Pay Points.
So little need for them to offer it, especially if it comes at an additional cost to them.
Point taken - the thread has definitely shifted focus. Some tidying is in order. We’ll move posts to an existing Nationwide thread, but it won’t be elegant, I’m afraid.
Meanwhile, let’s return to all things Monzo please.
Crikey, don’t give them ideas. They’d absolutely charge extra for basic services if they thought they could get away with it. At the end of the day, until the day comes where cash is no longer accepted as a means of exchange, a bank shouldn’t penalise the customers who still use it.
There’s a mixed response to this on the monzo forum.
I still don’t really understand packaged bank accounts. The premise seems to be that people want to give their bank extra money and, in return, they want something back. That something might be car breakdown cover, it might be a sausage roll, it might be a different coloured bank card, it might airport lounge access. Who knows and, sometimes I wonder, who even cares. The dream seems to be that you get more back than you pay, while the reality is often the opposite.
So, personally, I don’t get it, and it’s not for me, but the offer looks to be broadly comparable with other options in the market so it’s probably reasonable. There’s a limit to how exciting a relaunch of packaged accounts could ever be.
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They’d absolutely charge extra for basic services if they thought they could get away with it. At the end of the day, until the day comes where cash is no longer accepted as a means of exchange, a bank shouldn’t penalise the customers who still use it.