By Oscar Williams-Grut for Business Insider
LONDON — International money exchange startup Revolut has become to latest fintech to increase the fees it charges to customers.
Revolut announced in a blog post on its website late last week that it is lowering the cap for free ATM withdrawals on its cards from £500 a month to £200 a month. Customers will be charged 2% for any withdrawals above that monthly limit.
The startup, founded by a former Credit Suisse trader, is also introducing a £5 charge for its cards and now charges £6 to replace lost or stolen cards.
London-based Revolut offers a prepaid foreign exchange card linked to an app. Users load money onto the card using the app and then can spend it around the world, getting the best rate available, directly from MasterCard.
A spokesperson for the company told Business Insider over email: “Some of the services we provide are particularly costly for us – namely ATM withdrawals. Simply to cover our costs, we have introduced a £200 free monthly limit, with a fair and competitive 2% fee thereafter.”
N26, a German app-only bank, shut around 500 customer accounts earlier this year, blaming high ATM withdrawal costs.
The Revolut spokesperson said: “Likewise, the £5 fee for a RevolutCard is merely to cover the cost to produce, package and post the card. Customers will make their money back the first-time they use their card abroad.
“We’re confident that Revolut provides the ultimate value for our customers. Most UK banks and competitors within this space charge anything between 3 – 6% for every ATM withdrawal, alongside marking up the FX rate by up to 6%.”
While Revolut still offers a better deal than many rivals — with the best rate of currency interchange over its app — the increased fees highlight the growing issue of revenue generation and profitability in the consumer fintech space. So-called “neobanks” — app-only banks or banking services — face particular scrutiny as many give away costly services such as ATM withdrawals and currency interchange as a means to acquire customers.
Revolut’s fee changes come weeks after it radically scaled back its operations and stopped accepting new customers. Revolut used to operate globally but has reduced its scope to just Europe after a disagreement with partner Paysafe, a company that issues cards and processes payments on behalf of Revolut. The freeze on sign-ups is also due to the disagreement, according to an earlier report by Business Insider.
CEO Nikolay Storonsky told BI at the time that Revolut was applying directly to MasterCard for a license to issue its own cards. Storonsky said in late November that he hoped to get a licence within the week.
A spokesperson for Revolut told BI in an email on Thursday: “Regarding the MasterCard licensing application, we’re currently reaching a conclusion and things should be finalised very soon.”
Revolut, founded just a year and a half ago, has proved hugely popular with consumers, with more than 330,000 people signing up and a billion dollars spent on its cards.
First appeared at BI