After having doubled its losses in the last year, challenger bank Monzo has now announced that it will add two new fees by the end of October.
Anyone among its UK and European Economic Area customers withdrawing more than £250 in cash within 30 days will have to pay a 3% fee from October 31. At the same time, Monzo will introduce a £5 fee for replacing cards.
Some users won’t be affected at all. For instance, Monzo Plus customers and users who adhere to certain criteria will be exempt from the fees.
The criteria for non-Monzo Plus customers to be exempted are that they pay in at least £500 every 35 days to a Monzo account, get a monthly payment from the Department for Work and Pensions or the Department for Communities into their accounts, have student loans paid into their accounts every eight months or share a joint account with someone who does all of the above.
Still, Monzo seemed keen on adding that the neobank didn’t expect most of its customers to be affected by the new fees.
“The average Monzo customer only withdraws £36 a month, 90% of people have never ordered a replacement card, and 99% have never ordered more than two,” Monzo said in a statement. “Based on how people used Monzo in the last year, 79% of people wouldn’t have paid any of these new fees.
“If you’re getting lots of cash or replacement cards, we think it’s fair to ask you to cover those costs. In the rarer cases where people are using lots of cash or replacing lots of cards, whilst also doing most of their banking elsewhere, we think it’s fair to ask them to cover those costs so our other customers don’t have to.”
The news about the new fees comes after months of stories reporting how Covid-19 has affected the UK neobank.
When the FinTech revealed its annual results in July, Monzo said that the pandemic had placed “significant doubt” over its ability to continue as a going concern, revealing that the coronavirus has caused its losses to double within one year.
Other signs of the troubles Monzo find itself in include raising a £60m top-up round in June that saw its valuation drop by 40% from its $2bn valuation from 2019 to $1.24bn.
The epidemic has also forced Monzo to make hundreds its employees redundant or to place them on furlough, close its Las Vegas office, and suffer through rumours about it going bust. However, the bank denied these speculations when they arose in March.
Of course, Monzo is not the only digital bank to suffer with these issues. Its native rivals Revolut and Starling Bank have respectively tripled and doubled their losses within the last year.
There is hope, however, that Monzo Plus, the digital bank’s premium service, could help the company bring in some new revenue.
It relaunched Monzo Plus in July. Its first iteration of the premium offering had been launched in April 2019. However, it shut down the premium accounts in September that year after facing a smattering of customers complaints. The challenger bank did note at the time that it was hoping to relaunch the premium offering once all the kinks had been ironed out.
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