After Monzo’sannouncement on Tuesday of its plans to charge for the use of ATMs while abroad, many of its customers have voiced their intention to open secondary accounts with its competitors.
The update means Monzo current account users will be subject to a 3 per cent fee after a free £200 monthly foreign withdrawal limit, which is due to go live in December later this year.
In response, many customers have said they intend to utilise a more multifaceted approach for their banking needs going forward, to get the most bang for their buck.
Despite the 3 per cent option receiving two thirds of the community vote, members on Monzo’s forum have since lambasted the bank for its ‘dishonesty’ in only showing comparison rates for bigger, traditional banks in the initial information release.
In addition, some object to the adoption of a pricing model where regular consumers are penalised by Monzo’s efforts to implement a universal approach.
Monzo forum user Usualwill commented “So a bank that promotes itself as being fair and transparent to all users has introduced a pricing model whereby the infrequent traveller subsidises the regular traveller. How is that fair?”
The blame has been placed by users on the recent promotion of Monzo as a ‘fee-free prepaid travel card’ by MoneySavingExpert.com, saying that MSE customers are driving costs up for everyone else.
In comparison, Monzo’s most direct competitors both offer cheaper options for cash abroad: Revolut charges only 2 per cent after £200 a month, and Starling Bank doesn’t charge a fee at all.
Even some incumbent banks can be included in that list, with Metro Bank offering free usage within the SEPA area and the Halifax Clarity credit card being free globally.
So is this the beginning of a more versatile digital banking lifestyle?
Monzo has been open about the fact that its competitors are cheaper, but is adamant that the fee is necessary for the bank to remain sustainable.
Tristan Thomas, Head of Marketing and Community at Monzo, commented after the announcement that a 2 per cent charge like Revolut’s “wouldn’t come close to covering our costs”.
Starling Bank CEO Anne Boden has said “Starling has absolutely no plans to change its pricing policy for cash withdrawals abroad… and we are proud to continue this service for our customers.”
One could expect that the cost of subsidising ATM fees at a lower rate is made possible by the third-party “marketplace” model favoured by Starling and Revolut, combined with other money-making tactics such as Revolut’s £5 charge for its physical card.
It remains to be seen how this new fee will affect Monzo’s rate of customer growth, as users seek to fulfil their every financial need with the best options on the market.
Multi-banking, even in the digital world, is on the rise.
