I’m not a fan of this charge for personal account customers… goes against how Starling have operated the account from day one. I really hope it isn’t a sign of things to come, e.g. limits and fees on foreign usage. I understand it’ll cost them money, accepting Post Office cash deposits, but depositing cash in your account is one of the things that should be free of charge IMHO. As has been pointed out above, banks make money in lots of ways. At the very least, they should have applied a much higher threshold before levying the charge to personal customers.
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Yes, it costs Starling money when customers use a post office, but it costs all banks, not just Starling, and none of the other banks charge their customers.
In fact, the main banks would have more excuse for it because they also have branches which customers could use for free instead. Starling, of course, have no branches so customers have no choice but to use a post office, so it seems unfair to charge them.
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I feel like you could use that logic both ways though. Starling don’t have branches so there is no way other than the Post Office, therefore they have to support the Post Office and really should do for free (since they are enjoying the massive saving on operating a branch network).
On the other hand, it’s clearly a service the Post Office are charging them significant sums for, and most personal current accounts are a loss-leader for banks. With Starling, they don’t have huge diversity of products, so they can ill-afford loss-leaders and you get other benefits with Starling to offset not having the feature - like free transactions abroad, which other banks charge for.
As I said, I think they’ve tried to find a fair level so most people wouldn’t have to pay anyway. @Recchan disagrees with me, but that’s fair. I can accept the fact that people will have differing views on what’s fair.
Of course, but it would normally be key to employee retention to not make life awkward for your employees. Paying in cash or cheque, these days, would be considered exceptional and (personally) I believe it would be very awkward.
To be hard-nosed about it, it is a service like any other and it will cost banks to provide that service. If somebody uses it a lot, it will cost a lot. Why should other customers then subsidise these heavy users? There are other ways to pay money into a bank account, which are actually much more common. Most of the time, income (of any type, including salary, pension, interest, investments) gets paid digitally so the default is not to be paid in cash. Most people with large sums of cash withdrew it at some point.
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On this specifically, I always thought it was funny that people claimed that “going full Monzo” meant having Monzo and another account “for cash and cheques”.
However, I’m not against multi-account banking and actually think that’s what everyone should do.
Each bank invests differently to create a different set of free and chargeable features; if you are savvy you can enjoy a lot for free across a few different accounts.
Also, except for people paid in cash, I don’t think this precludes most people from continuing to use Starling without having to pay any fees, so it’s a bit different. It’s not something that is going to make it impossible for people to deposit cash for free - it’s people that deposit a lot of cash will get charged for that.
Given that Starling is a “digital bank”, you wouldn’t expect a huge number of cash-heavy users anyway. If that’s somebody’s use-case, perhaps they would prefer a bank more set up to deal with it.
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This isn’t true actually, there used to be a point where you couldn’t pay cash in.
Not as much as a branch network, I’d reckon
First part might be true, but Starling is selling their banking platform and can definitely afford to lose money. Remember they’re still a financial technology startup, if they need funding to further develop their model, they can get it.
Yes most, not anyone that gets paid in cash semi/regularly. Heck, if you had a rather large family your birthday/Christmas money would topple your thousand limit for the year.
This is a very ill considered post. Why should I pay tax, when other people benefit from it?
The answer is because that’s how life works. You sometimes pay for things that others use and vice versa.
Why should people be subsidising your usage of multiple free products? You said it yourself, current accounts are loss leaders. Stick to your morals on cross-subsidies and close everything bar one.
Or perhaps we only like it when we’re the benefactor?
I’ve had an account from the beginning, and I don’t think that’s true. Prior to the Post Office deal, Starling had an agency banking agreement where you could pay in cash at NatWest branches. It was not very well-publicised, but the facility was there. Anyway, I think you are making my point for me in many ways there - Starling has always been a digital, primarily smartphone app-operated, bank since it started. This would, naturally, attract customers of a lower inclination to use cash at all, never mind paying in significant sums (and I do regard £1,000 as significant). They therefore don’t expect users to pay much cash in - it’s perfectly possible that larger depositors have been unexpected and throw their business model out of whack.
As for other banks that have branches, the situation there is quite different due to political pressure. For other banks, offering unlimited Post Office support is the get-out-clause which allows them to close branches, without being subject to too much scrutiny from politicians or too much vitriol from lobby groups. That’s why they do it. Starling, in a business sense, doesn’t “need” to do this as their customers have never had branches in the first place.
You ask about my own usage of multiple banking products. I am totally unscrupulous about this. The way I see it, I have the choice to apply to any bank I want and they have the choice to accept my application (or not). The free market at work! I don’t have any morals about cross-subsidies, my only comment on it was attempting to consider what Starling’s analysis might have been from a business perspective. I don’t pretend that it was anything more than that. I’m not on a moral high horse here. On the contrary, you seem to be the one suggesting others “should” subsidise cash withdrawals. I don’t think that anything “should” necessarily be subsidised, but if it is to my benefit I’ll take it! If it isn’t, well that is fine too but I may choose not to use banks which don’t provide me with any benefits at all.
If Starling, for whatever reason, decide that heavy users of the Post Office are costing them too much, then they can either limit/restrict access, increase charges or raise more revenue elsewhere (through cross-subsidising via unrelated charges on other services, fundraising as you say, etc). Which would you rather? They seem to have gone for a solution with the lowest impact to the majority, which seems fair to me.
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Here is another, less publicised gem from the new terms:
In addition and subject to any limitation of liability provisions contained in the Agreement, we will not be liable to you for any loss or damage arising from: […] any successful transactions which exceed the contactless limit you have set.
If I understand this correctly, if you do set your own contactless limit, and starling do let a transaction through above that limit, they still consider themselves off the hook 
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As a lump sum, I would agree.
However, over a year, this equates to less than £20pw
For some, therefore, the £1,000 figure may appear low.
Personally though, as someone who rarely uses cash, and, to the best of my recollection, has not made a cash deposit since 2018, this is all immaterial to me.
Bah, humbug 
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£1000 is a bit low in the grand scheme of things, though the question might be how many customers are actually paying in over £1000?
These fees from my mind at least often seem more about discouraging use than making any money from it.
Wouldn’t surprise me if it’s an expensive service over £1000 and it’s a tiny proportion of customers that are putting in huge sums of cash.
There’s an argument to be made that cash services should continue to be free at all banks as it keeps accessibility open. But none of the digital only banks are actually that accessible in the fist place.
As long as other banks continue to provide a better service then it’s not an issue in the grand scheme of things. Only when all banks start charging does it become a problem
I largely agree with you, but this is the crux of it:
Surely other banks are looking closely at what their competition is doing. They see some implementing card freezes / custom contactless limits / merchant logos / whatever, see customers like it, and implement it too.
In the same way they’ll see banks introduce fees for stuff that has historically been free. See no-one cares, so do the same.
People keep saying “challenger banks are making legacies wake up, modernise, improve their offering” - I think “challenger” banks are also ringing in the end of free banking as we know it in the UK as they start charging for standard day-to-day banking.
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That’s a good point. And considering they have much lower overheads and, in Starling’s case, are making a profit, I think this is quite a poor move from them. It doesn’t affect me personally as I doubt I deposit anywhere near £1,000 over the course of a year, but I think the threshold should have been much higher. I really hope it’s not the thin end of the wedge. If they start introducing fees for other things that were previously free, then I might as well move back to Nationwide. I’m paying for my FlexPlus anyway!
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Then it might be time for the government to put a mandate in that personal banking customers must be able to access and deposit money without fees. Or you mandate that employers must offer the option to pay direct to your bank account.
But we’re no where near that scenario yet.
Why would you move from Starling (a modern bank) to Nationwide though? One of the most ancient banks in the country? Why not one with a good, modern offering like RBS/NatWest or Barclays?
I read that as @Dan just using Nationwide because it was an existing account he already had, so really just for ease - not because they offer a great set of features!
I would expect this. It will be meant for rare occasions where you use your card with offline-contactless. Mastercard rules allow up to around £20 to be processed offline for transport uses, and Starling would have to process this even if you had set your contactless limit to zero. I think that’s quite fair and not actually something to worry about, in the scheme of things.
I understand that point, but given the likely pricing structure for Starling (what they actually get charged by the Post Office in the background) I suspect they want to discourage “little and often” cash usage just as much as “large lump sum”, as there is probably a per-transaction charging element. Also, in the context of most of their users hardly ever making a deposit, this is probably still considered “heavy” (in the sense of above-average) usage by them, even if it’s not objectively heavy usage as most people would think of it.
I still have a strong hunch that the average Starling customer is depositing a few pounds (probably less than £60) every few months at the most.
I think you are right on the money here! Most likely, this is just to discourage “heavy usage” (as Starling see it).
I still personally think that’s better than a hard limit (as Monzo do with PayPoint) and understandable from a business perspective, so I’m reluctant to criticise it.
Assuming that Starling believed things couldn’t go on as they were, this seems like the best compromise. It’s certainly fairer than trying to use the principle of cross-subsidy by introducing fees elsewhere (affecting many more customers) to offset the cost of heavy cash-users.
This is where I think the political dimension is. Banks, clearly, want to encourage card usage. Remember they get paid when you use card, whereas they have to pay for cash-handling services (this applies even if withdrawing cash in-branch, as ultimately that cash will have been delivered via an armoured van at a cost to them).
They therefore do not remotely want to “support cash services”, but they are under pressure around branch closures and the easiest way to stop politicians from blocking them is to be able to say that they are making alternative provision for cash and cheques, to “help vulnerable customers”. This, basically, is pointing at the Post Office as a quasi-branch network and saying “look, you can do all your banking there, no need for the branch”.
So, for high street banks, offering a full range of services at the Post Office might be costly, but it is cheaper than keeping branches open and so it is the lesser of two evils.
The political pressure also comes from a perception that the banks are “taking services away” by closing branches, but Starling (and other fintechs) never had branches so aren’t targeted for the same criticism, and therefore no need to “make up for” the “lost” services. Meanwhile, regulators are keen to “protect cash” as they are under pressure from organisations like Age UK, but they also don’t want to stifle the innovation of modern fintechs as they seem to buy in to the idea that a rising tide lifts all boats and the fintechs are seen as providing valuable competition, so they don’t want to add undue regulatory burden which could drive them into the ground. They have therefore targeted big banks on this subject, but left fintechs to do what they want.
I know there are moral arguments around cash access too, but I don’t really think they factor into this generally business-case focused thinking very much. I also get the feeling regulators are loathe to force the issue on fintechs as the majority of their customers are presumably virtually cashless, so it would not really serve their customers better anyway. To be blunt, you don’t expect 94 year old great-grandmothers who prefer cash to be Starling customers.
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Except for the double-standards at play, which mean the big banks can’t really get away with what the fintechs can.
This is why I don’t personally think it’s going to result in this:
Me too, but I hope/suspect that it’s not. Starling won’t attract customers if they make their product too unappealing, and they are still in a growth phase currently - so need to be very competitive.
I doubt they’d do this, but if they do it would probably only apply to the “CMA9” banks, I would guess.
Personally, I think that would be much fairer and a better option.
PS: Just to add, those banks all have branch networks, so I would ultimately expect some kind of quid-pro-quo where they agree a deal to maintain long-term Post Office free access for personal customers in return for a virtual “green light” on widespread branch closures.
I think they’ve made the same calculated decision as they did when they brought in charges for large EUR balances - it’s only going to affect a tiny proportion of customers, but will save them significant sums. The pricing now means it’s more or less the same getting a business account for “income level” cash deposits, which might also have been part of the thinking - encourage people to open a business account
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I’m sure they’ve crunched the numbers and they’ve worked out only a small percentage of their customers will be impacted, but I have a feeling that this could be damaging to Starling’s push to get people to use them as their main account.
While few people will be hit, I think most would like the option to deposit as much cash as they like (notwithstanding money laundering checks, etc) without having to worry about being charged for it. This will be especially so when basically every major competitor does in fact allow unlimited cash deposits for free.
The £1000 threshold means you can’t sell a single moderately expensive item for cash without being charged to then put that money in to your account - I’m sure many people will have sold a car for cash at some point, even if they aren’t usually big cash users.
I’ve been using Starling as my main bank account for quite some time now, and although I haven’t deposited £1000 in a calendar year for a long time, it is something I may need to do in future so I think I am going to have to switch away when these charges come in. I’m not too interested in having a separate account open, just in case, for cash deposits, and the advantages Starling had app-wise when I opened the account are no longer quite as pronounced so that is no longer enough to keep me despite these changes.
It’s definitely a shame as I’ve been generally very happy with the service Starling has provided me - but my general thoughts have always been that the fintechs have to offer basic banking on a par with the incumbents to be taken seriously and this sadly feels like a step in the wrong direction to me.
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You make a good point, although this impact may be limited by most people thinking that a £1,000 limit is enough?
That’s probably their thinking (even though, as you suggest, the thought of any limit at all, even a massive one, is often something which puts people off when unlimited feels less restrictive with nothing to keep track of).
Is it your only account then? Again, I’d guess that’s probably quite rare for fintech customers who are both more engaged with banking generally and more likely than with most banks to have other accounts (as the banks themselves have only been operating for a short time, so most customers are not opening a fintech account as their first account).
A bit like Monzo, I think most Starling customers would therefore have a secondary account of some type to fall back on, if they ever needed it.
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Yes just look at the number of people who pay for unlimited mobile data deals when they don’t need them.
Starling need people to switch to them, and use them properly as their main bank account. We can see from the switching figures that most people are very reluctant to do that.
This will be just one more thing that will dissuade people - more than likely their existing bank gives them unlimited cash deposits, so why move to a bank that might charge you?
It’s my only sole account, I do have another joint account - but for reasons of neatness I don’t like transferring money in and out of there as it makes my life more difficult when I need to work out what’s been going on bills wise at the end of the month.
I think you’re right that most Starling customers will have a second account - but that’s probably what Starling need to snap people out of doing.