Monzo - weighing up how to pass on foreign ATM fees

29
Found 13th Sep 2017Edited by:"davewave"
Seems like Monzo might end up, at some stage, no better than a high street bank with their current announcement about the cost of people withdrawing cash overseas - the main reason people bothered getting a card from an new entrant to market.

monzo.com/blo…485
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We launched the Monzo Alpha back in October 2015 to a few hundred people. At the time, we said “we’re committed to launching prototypes early and gathering feedback. We can then iterate and improve” and that approach has proven to be incredibly useful. Thousands of people have sent feedback and given us their thoughts on the product we’re building, through in-app chat, social media and our community forum. Together, over the last two years, we’ve started to build the kind of bank that we’d be proud to call our own.

Today, we’re coming to our community again to ask for your help with a tricky decision. As the Monzo user base grows and evolves, people are increasingly using their Monzo Mastercard® Prepaid Debit cards abroad. Very high foreign transaction fees have always been one of the things we hated about our old banks, and we’re committed to keeping foreign spending free for our users.

However, when a Monzo card is used to withdraw cashfrom an ATM outside of the UK, Monzo pays the ATM owner a substantial fee. That fee varies from around 1% in Europe to just over 2% outside of Europe. We currently absorb the ATM fees ourselves.

We want to build a sustainable, viable business that is around for many years to come. At the moment, the rising costs of foreign ATM withdrawals makes that difficult. So, in the spirit of transparency, we’d like to share the numbers behind these costs and three proposed solutions.

We should emphasise that spending by card in a shop, hotel or restaurant (any “point of sale”) will remain free of charge. Online transactions in a foreign currency will also be free of charge - we’ll pass on the Mastercard rate with no markup. ATM withdrawals in the UK willalsocontinue to be free.

ATM costs have more than doubled in the last yearIn June 2016, ATM withdrawals were costing us just over £6 per active user per year. By the end of August 2017, ATM withdrawal costs had more than doubled to nearly £16 per active user per year.

This seems to be a result of a combination of factors, including people using their Monzo cards more frequently, increased awareness of the free cash withdrawals we’ve offered, and people signing up specifically to use the Monzo card abroad.

£16 is more than half of the total cost per customer on the current account, meaning we’d need to find additional income sources to cover that cost.

A small proportion of customers generate a large proportion of the costsJust 13% of customers account for more than 85% of our total ATM costs in any given month. Many of these people signed up to Monzo because of the great exchange rates and fee-free ATM withdrawals abroad, but don’t keep the card once they’re back in the UK. If we continue down this path, 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.

We don’t think that’s fair. We want to find a solution that benefits the Monzo community as a whole.

What do other banks charge?When thinking about a solution to this, we wanted to see what other banks charge to withdraw cash abroad. It’s really difficult to find a definitive answer for each bank because everyone communicates it slightly differently.

So we took matters into our own hands and took a selection of debit cards from different banks to Berlin and San Francisco to test it out. We withdrew €100 in Berlin and $100 in San Francisco (the ATM in San Francisco also charged us an

Read this earlier, if you look at the votes 65% of people have voted for a £200 no charge withdrawal abroad then 3% after on a monthly basis, people are bizarre, there's no way you'll take out less than £200 cash abroad! I'd rather the other option, 1% Europe and 2% outside Europe.. but even then, I'm looking to switch back to fully free no charge.
I only got this card to save up for holidays and then use that money abroad, now that they're adding a fee, I'll be switching cards/apps.. any recommendations for free ATM withdrawal/purchases abroad?
f2k811 m ago

Read this earlier, if you look at the votes 65% of people have voted for a …Read this earlier, if you look at the votes 65% of people have voted for a £200 no charge withdrawal abroad then 3% after on a monthly basis, people are bizarre, there's no way you'll take out less than £200 cash abroad! I'd rather the other option, 1% Europe and 2% outside Europe.. but even then, I'm looking to switch back to fully free no charge.I only got this card to save up for holidays and then use that money abroad, now that they're adding a fee, I'll be switching cards/apps.. any recommendations for free ATM withdrawal/purchases abroad?


I'd take out less than £200. I'd use my cards for everything I could and have some cash as a back up

Guess it depends where you go and how many of you, etc.
No problems with the Halifax Clarity card thus far
Halifax Clarity card or similar from a proper financial institution is the way to go. These fringe cards eventually charge or disappear. I recently tried using a Supercard (don't exist now) abroad to withdraw cash and it failed at every ATM I tried.

This is a prepaid card. They are earring interest on the funds immediately, perhaps we should have an opportunity to discuss that part of their business too. It's all very amateurish.
Destard29 m ago

No problems with the Halifax Clarity card thus far


No ATM withdrawal fees?
DanB891 h, 30 m ago

I'd take out less than £200. I'd use my cards for everything I could and …I'd take out less than £200. I'd use my cards for everything I could and have some cash as a back upGuess it depends where you go and how many of you, etc.


I don't exchange any cash before I go, I literally take all my cash out abroad, the last 2 times I've used my Monzo card I've had the best rates ever on a holiday.. literally JUST the Mastercard exchange rate which is sometimes better/worse than the VISA exchange rate, no charges, nothing. You get exactly what you convert, that's why I loved this card, and now it's about to lose that effect.
Cr0m1 h, 34 m ago

No ATM withdrawal fees?


No withdrawal fees, interest from day 1. I used mine in Japan, transferred the payment directly to the card prior to withdrawal and it cost me pennies if my memory serves me right. My all singing all dancing free Supercard didn't work. I didnt expect Japan to be such a cash using country so I got caught out. For me it's take reasonable amount foreign currency and use Clarity for all things electronic.

These wannabe financial institutions eventually fold or charge and they all seem a bit pointless. Fundraising for a bank, whatever next.
Edited by: "OllieSt" 13th Sep 2017
OllieSt30 m ago

No withdrawal fees, interest from day 1. I used mine in Japan, transferred …No withdrawal fees, interest from day 1. I used mine in Japan, transferred the payment directly to the card prior to withdrawal and it cost me pennies if my memory serves me right. My all singing all dancing free Supercard didn't work. I didnt expect Japan to be such a cash using country so I got caught out. For me it's take reasonable amount foreign currency and use Clarity for all things electronic.These wannabe financial institutions eventually fold or charge and they all seem a bit pointless. Fundraising for a bank, whatever next.


Thanks for clarifying (haha) I have one already I knew it had a perfect exchange rate but wasn't sure what the situation was with cash withdrawal
Decided to open up a Starling Bank card and close my Monzo down, no fee's for using the card on purchases/ATM withdrawals abroad, and you earn interest on credits at 0.5%, not much but a bonus that Monzo didn't have. App is almost a replica of Monzo too, allows you to freeze card at any time and transacations pop up whenever you make them! Happy days.
f2k81 h, 14 m ago

Decided to open up a Starling Bank card and close my Monzo down, no fee's …Decided to open up a Starling Bank card and close my Monzo down, no fee's for using the card on purchases/ATM withdrawals abroad, and you earn interest on credits at 0.5%, not much but a bonus that Monzo didn't have. App is almost a replica of Monzo too, allows you to freeze card at any time and transacations pop up whenever you make them! Happy days.

Just downloaded Starling after reading this, don't suppose you have a pass?
rogan179129 m ago

Just downloaded Starling after reading this, don't suppose you have a …Just downloaded Starling after reading this, don't suppose you have a pass?


Unfortunately not, I'm in the same boat mate haha just waiting for the code to come in, 4 day wait
Cr0m3 h, 33 m ago

Thanks for clarifying (haha) I have one already I knew it had a perfect …Thanks for clarifying (haha) I have one already I knew it had a perfect exchange rate but wasn't sure what the situation was with cash withdrawal


I use online banking to transfer to the credit card an amount equivalent to what I'm going to withdraw from the ATM.
Either beforehand or asap after the withdrawal. I have not paid a penny interest nor incurred usage fees.

Edit: talking about a Halifax Clarity card.
Edited by: "Uranus" 14th Sep 2017
rogan179111 h, 22 m ago

Just downloaded Starling after reading this, don't suppose you have a …Just downloaded Starling after reading this, don't suppose you have a pass?


See you pm's
Starling is fantastic. The speed of notifications is instant. Supports Android Pay and Apple Pay.

Customer support is excellent too.

Some of the High Street banks could learn a thing or two from this bank.
f2k810 h, 57 m ago

Unfortunately not, I'm in the same boat mate haha just waiting for the …Unfortunately not, I'm in the same boat mate haha just waiting for the code to come in, 4 day wait


Check your pm.
artnada2 h, 0 m ago

Starling is fantastic. The speed of notifications is instant. Supports …Starling is fantastic. The speed of notifications is instant. Supports Android Pay and Apple Pay.Customer support is excellent too.Some of the High Street banks could learn a thing or two from this bank.


So far, just by looking up Starling I've noticed it has an upper hand on Monzo, the 0.5% you earn on credits, as well as an overdraft facility and the fact that you can connect the card to Apple/Android pay.. all of which could not be done on Monzo, I absolutely loved Monzo the time I had it, but with this new fee coming in, I'm glad I'm making the switch to Starling, just hope Starling don't go down the same route some point in the future. Thank you for the code too btw!
f2k81 m ago

So far, just by looking up Starling I've noticed it has an upper hand on …So far, just by looking up Starling I've noticed it has an upper hand on Monzo, the 0.5% you earn on credits, as well as an overdraft facility and the fact that you can connect the card to Apple/Android pay.. all of which could not be done on Monzo, I absolutely loved Monzo the time I had it, but with this new fee coming in, I'm glad I'm making the switch to Starling, just hope Starling don't go down the same route some point in the future. Thank you for the code too btw!


Yeah I've literally just closed my Monzo today.
Anyone got a spare Starling code?
drywm9 h, 0 m ago

Anyone got a spare Starling code?


Check your PM
Try the code FLUX2017 to get an account when signing up
davewave13th Sep

We launched the Monzo Alpha back in October 2015 to a few hundred people. …We launched the Monzo Alpha back in October 2015 to a few hundred people. At the time, we said “we’re committed to launching prototypes early and gathering feedback. We can then iterate and improve” and that approach has proven to be incredibly useful. Thousands of people have sent feedback and given us their thoughts on the product we’re building, through in-app chat, social media and our community forum. Together, over the last two years, we’ve started to build the kind of bank that we’d be proud to call our own.Today, we’re coming to our community again to ask for your help with a tricky decision. As the Monzo user base grows and evolves, people are increasingly using their Monzo Mastercard® Prepaid Debit cards abroad. Very high foreign transaction fees have always been one of the things we hated about our old banks, and we’re committed to keeping foreign spending free for our users.However, when a Monzo card is used to withdraw cash from an ATM outside of the UK, Monzo pays the ATM owner a substantial fee. That fee varies from around 1% in Europe to just over 2% outside of Europe. We currently absorb the ATM fees ourselves.We want to build a sustainable, viable business that is around for many years to come. At the moment, the rising costs of foreign ATM withdrawals makes that difficult. So, in the spirit of transparency, we’d like to share the numbers behind these costs and three proposed solutions.We should emphasise that spending by card in a shop, hotel or restaurant (any “point of sale”) will remain free of charge. Online transactions in a foreign currency will also be free of charge - we’ll pass on the Mastercard rate with no markup. ATM withdrawals in the UK will also continue to be free.ATM costs have more than doubled in the last yearIn June 2016, ATM withdrawals were costing us just over £6 per active user per year. By the end of August 2017, ATM withdrawal costs had more than doubled to nearly £16 per active user per year. This seems to be a result of a combination of factors, including people using their Monzo cards more frequently, increased awareness of the free cash withdrawals we’ve offered, and people signing up specifically to use the Monzo card abroad.£16 is more than half of the total cost per customer on the current account, meaning we’d need to find additional income sources to cover that cost.A small proportion of customers generate a large proportion of the costsJust 13% of customers account for more than 85% of our total ATM costs in any given month. Many of these people signed up to Monzo because of the great exchange rates and fee-free ATM withdrawals abroad, but don’t keep the card once they’re back in the UK. If we continue down this path, 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.We don’t think that’s fair. We want to find a solution that benefits the Monzo community as a whole.What do other banks charge?When thinking about a solution to this, we wanted to see what other banks charge to withdraw cash abroad. It’s really difficult to find a definitive answer for each bank because everyone communicates it slightly differently.So we took matters into our own hands and took a selection of debit cards from different banks to Berlin and San Francisco to test it out. We withdrew €100 in Berlin and $100 in San Francisco (the ATM in San Francisco also charged us an


Thanks for the heads up (no direct notification). Any idea of when?

I can't see how on earth anything other than the 1 & 2 percent 'exact cost' option being fair! Well add in paying us at least 1.5% on credit balances!

For those mentioning Clarity, be careful - efficient use to get cash abroad DOES show on credit report - exactly the same as desperate inefficient use (general cash advances on credit cards). There is an article on MSE - as with any credit application, the effects will differ from one lender to another - if looking a mortgage in the next 12 months, don't risk it would be my advice.
The result is in...

£200 free allowance per month, 3% charge for foreign withdrawals thereafter
Cr0m13th Sep

Thanks for clarifying (haha) I have one already I knew it had a perfect …Thanks for clarifying (haha) I have one already I knew it had a perfect exchange rate but wasn't sure what the situation was with cash withdrawal


You still have to pay local ATM fees, the same type as the ones that you pay over here, where the machine supplier imposes a charge.
jnm2127th Sep

Thanks for the heads up (no direct notification). Any idea of when?I …Thanks for the heads up (no direct notification). Any idea of when?I can't see how on earth anything other than the 1 & 2 percent 'exact cost' option being fair! Well add in paying us at least 1.5% on credit balances!For those mentioning Clarity, be careful - efficient use to get cash abroad DOES show on credit report - exactly the same as desperate inefficient use (general cash advances on credit cards). There is an article on MSE - as with any credit application, the effects will differ from one lender to another - if looking a mortgage in the next 12 months, don't risk it would be my advice.



Used halifax clarity for years and only for foreign ATM withdrawals. No mention of them on my credit records at all.
deeky1 h, 38 m ago

You still have to pay local ATM fees, the same type as the ones that you …You still have to pay local ATM fees, the same type as the ones that you pay over here, where the machine supplier imposes a charge.


Not true.

I have been using my Nationwide FlexPlus abroad in multiple locations with no fee's at all.

I did however try to use a Satander in Madrid and they wanted a 5 euro fee. I cancelled and walked to Bankia 30 seconds away and was free.
jamesWHUFC30 m ago

Not true.I have been using my Nationwide FlexPlus abroad in multiple …Not true.I have been using my Nationwide FlexPlus abroad in multiple locations with no fee's at all.I did however try to use a Satander in Madrid and they wanted a 5 euro fee. I cancelled and walked to Bankia 30 seconds away and was free.


Hence why deeky stated 'where the machine supplier imposes a charge.'

I have come across a couple of atms in Greece and Spain that wanted a fee.
Edited by: "chocci" 17th Oct 2017
jamesWHUFC44 m ago

Not true.I have been using my Nationwide FlexPlus abroad in multiple …Not true.I have been using my Nationwide FlexPlus abroad in multiple locations with no fee's at all.I did however try to use a Satander in Madrid and they wanted a 5 euro fee. I cancelled and walked to Bankia 30 seconds away and was free.


I'm talking about the ones you get like the ones here that you might find in a corner shop, where it says there is a £1.99 charge to use this machine. The charge is nothing to do with the bank, it's purely a local charge. It tells you beforehand and you can either agree to pay it or, as you say, go somewhere else where there is no charge. You will usually find that banks etc don't charge to use their ATMs.

Edit: In my original post I should have said 'You MAY still have to pay local ATM fees'.
Edited by: "deeky" 17th Oct 2017
chocci6 h, 13 m ago

Used halifax clarity for years and only for foreign ATM withdrawals. No …Used halifax clarity for years and only for foreign ATM withdrawals. No mention of them on my credit records at all.


There is a section for cash adavances. I have seen it, but because of various factors we have not used clarity for cash in a few years (Monzo, Brexit meaning preloaded pre-exchanged was better, Santander fee free at Santander in Spain, etc.). Looks like it may be coming back to the top of our list!
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