Monzo to save cash by stopping customers transferring money via debit cards
Digital bank Monzo is next month stopping customers from transferring any money by debit card when they top up their accounts.
From Tuesday 2 October, the only way customers can add cash to their accounts is via bank transfer or by having their salary paid into the account directly.
Monzo scrapping the debit card money transfer service is due to save the bank about £4 million a year. This is the amount currently paid in fees to a third-party for every top up Monzo customers make by debit card.
The customers who will be hit hardest by this service being cancelled are those that use their accounts like a pre-paid card. Monzo decided that scrapping the service altogether was better than passing on the third-party fees to customers. Their competitor challenger bank, Starling, has already stopped the service.
Those new customers who have joined Monzo since March have been unable to use their debit cards to add money to their accounts, and the bank says it has seen no reduction in customer satisfaction as a result. From now on Monzo customers will have to find alternative ways of getting money into their accounts. For example, they can use the Bankers’ Automated Clearing Services (BACS) money transfer system. This involves setting up payments from other bank accounts.
Some customers may opt for setting up standing orders for regular payments to be transferred automatically into their Monzo accounts. Of course, it’s possible to have a salary paid straight into a Monzo account by letting employers know the bank details. The Monzo.me service is also available for those who know the username of the account to which they would like to transfer funds.
Monzo first revealed its decision to stop customers from transferring money by debit card to their accounts via its forum in August. But a lot of customers who regularly use their debit card to top up their accounts only received an email alert today.
Jami Welch from Monzo explained that the bank originally included top ups by debit card in the app because when Monzo was founded in 2015, it began life as a prepaid card, and could not offer any facility for bank transfers. But now, Monzo is a fully fledged bank and there are other ways to put money into an account more cheaply.
Monzo turned its concentration to its current account debit cards when it killed off pre-paid cards in April. In 2017, the bank also decided to start charging for customers withdrawing cash at ATMs while away on holiday. Welch says the bank hopes customers will have enough time to work out other ways to add money that will work best for them.
Monzo is one of a number of challenger banks disrupting the traditional world of banking. Along with new banks like Atom, Revolut and Starling, it enables bank accounts to be opened and managed simply via an app. It can also help users track their spending.
Monzo is among the most prolific players in the growth of digital banking, using mobile app technology to streamline people’s personal finance experiences. You can read our review to discover what you need to know about the bank. As part of this new wave of banking aimed at making your financial life easier, you can also discover more about how app-based banking is changing things in our handy guide.
Picture: Monzo
