Mobile-only bank Monzo is set to start charging for overseas cash withdrawals – but says spending by card will remain free.
The company says the move is necessary become of the high transaction fees it is being charged by foreign ATM owners – around 1% in Europe and 2% outside Europe.
Monzo has so far soaked up those ATM fees itself but says that is unsustainable if it is to be a viable business for years to come.
In June 2016, ATM withdrawals were costing the bank around £6 per active user per year. By the end of August 2017 it had more than doubled to nearly £16 per active user per year.
Monzo also points out that just 13% of its customers account for more than 85% of its ATM costs in any given month.
The bank is consulting with its customers and has set out three potential ways of charging for ATM withdrawals abroad.
Option one is to charge 1% for withdrawals in Europe and 2% outside Europe, option two is to charge 1.5% for all ATM withdrawals outside the UK and option three is to allow customers a £200 free allowance but charge 3% thereafter.
Monzo emphasises that spending by card in shops, hotels and restaurants will remain free of charge.
Monzo started in February 2015 and received its full UK banking licence in April 2017.
It currently offers a Mastercard prepaid debit card and over the past couple of months has also started rolling out a ‘preview’ version of its current account as part of the product’s beta testing.
More than 1,500 customers have started using the current account, which currently works with a separate Monzo app and its own debit card.
Monzo says more features are being added all the time and will eventually include Apple Pay and Android Pay, 24-hour customer support and payments through a contacts tab.