Author Lauren Howells
Monzo has announced that its prepaid debit cards may no longer be fee-free when used for ATM withdrawals outside of the UK.
In a blog published on its website on 13th September, the app-based bank has said that the “rising costs of foreign ATM withdrawals” makes building a sustainable, viable business, difficult. In order to ask its community for their opinions about how the new charges may look, Monzo has set up a poll and discussion topic on its website.
Bank currently absorbing ATM fees
At present, Monzo enables customers to withdraw and spend money overseas, on their prepaid debit card, at the Mastercard rate, with no markup. The bank has said that they are currently absorbing the ATM fees themselves and with costs reportedly more than doubling in the last year, from an average of £6 per active user per year in June 2016 to nearly £16 per active user per year by August 2017, it wants to find a way to “reduce this increasing cost burden in the fairest way possible”.
Minority of customers generating majority of costs
Monzo reported that only 13% of their customers were accounting for more than 85% of their total ATM costs in any given month.
The bank says that many of these people use the card to spend abroad but then don’t keep the card when they’re back in the UK.
It concluded that it didn’t think it was fair that the majority of customers would end up supporting a small minority who “benefit from the card’s rates, while not necessarily engaging with the wider benefits of Monzo”.
Monzo has given its customers four options to choose from
In order to find a “fair way to pay this cost”, Monzo has given its customers 4 options:
- a 1% charge for ATM withdrawals in Europe and a 2% charge for withdrawals in the rest of the world or
- a 1.5% charge for ATM withdrawals everywhere outside the UK or
- £200 free allowance per month and a 3% charge for withdrawals thereafter everywhere outside of the UK or
- any other ideas customers have about how it could work.
Spending abroad will remain free
However, spending abroad at any “point of sale”, such as a shop or restaurant, will remain free of charge.
There won’t be any charge for online transactions in a foreign currency, either.
It will also still be free to withdraw cash from an ATM in the UK.
Monzo says that if there is a clear winner, it will choose that option
Anyone who wants to have a say has until Wednesday 20th September to voice their opinions in the poll. Monzo says that it will aim to come to a decision as soon as possible after that.
Any changes will come into effect two months after Monzo has communicated these changes to its customers and anyone else who has voted.
Monzo says that if there is a “clear winner”, it will go with that option. If it’s a close call, Monzo says that it will make the decision, taking into account customer feedback and discussion, as well as the long term vision for the bank.