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Comment by Sholmesy | Hacker News Reader

Monzo is awesome; they deserve all their success. They have single handedly forced banks to compete on UX, though Monzo still wins by a significant margin.

Huge stat from the article;

> And in terms of customer growth, extrapolating stats from a recent Nationwide annual report (PDF link), the challenger bank says it now accounts for 15 percent of all new bank accounts opened each month in the U.K

Is this accurate? 15% of bank accounts opened in the UK each month are for Monzo? That's an insane stat.

No affiliation, just a happy Monzo Beta user.

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I don't understand debit culture in the UK

I'm an American who has a Monzo card and has spent a fair amount of time in London. Why don't people use credit cards???? The rewards are usually pretty good and as long as you pay off your balance every month, you're getting ~3% of your purchases back in rewards/credit

I stopped using Monzo because there are no rewards! Sure it gives me notifications and is easier to see my balance/add money than my Barclays account, but what is the point of the good UX/UI? Is it for fraud detection and making sure the merchants/bank aren't cheating you?

I ended up going back to using my oyster card/barclays card when contactless was the only option, and credit for everything else. Transferwise was also a godsend for converting money with clear visibility into the exchange rate/no fees

I agree that Monzo has been a great catalyst for UK banks to get their shit together on mobile apps etc. but there is nothing fundamentally different about their business...they're a debit-only bank with no physical presence and a nice app - and why don't more people use credit cards instead? Is it because it makes P2P transfers easier than the archaic bank transfers?

I'll try to provide an answer, as I'm European but moved to the US. We don't have this "you're in debt" culture that I think you create when you start school in the US. Very early you have to take a loan in order to study, which facilitate the idea of owing banks.

I opened a secured card here in the US, but I never use it, because it just feels weird to "owe" the bank money and not to be able to pay it back as fast as I can. I usually have to wait for the end of the month, and if I mess something up then I have to pay huge fines (that you cutely call APR).

The more you get into this system, the more you seem to collect credit cards. I have friends with dozens of them. What happens if you lose one? Or if you get your wallet stolen? Or if you forget that after the first year you start paying fees on it? etc.

Most of us can live without the rewards if we get other benefits. For example with Monzo, you get added security, you can use it all over the world for free, you can send money to your friends or split the bill easily, you can track your finance, set limits on your budgets, see what was that 30$ you spent a month ago and where it was, round up your purchases to save money, etc. There's just so much benefits that you end up using it all the time as your default card. That's how they get you I guess. But it's so much more practical and easy to use that people have fell in love with their branding as well.

"people have fell in love with their branding as well"

This is what I struggle with understanding. Maybe it's because I'm from a "slightly" older generation. But I've watched my younger colleagues one after another get Mondo(Monzo) cards and I've quizzed them on why they switched. The answers came in two categories a) because it has an app and b) dunno? because everyone else has one. So...I'm still stumped for a good reason to switch.

But kudos to the company behind this because I do appreciate the fact that it seems to have been a kick up the backside of ye olde guard.

Getting a card is free and simple, I suggest trying it and closing your account (which is easy as well) if you don't like it.

> We don't have this "you're in debt" culture that I think you create when you start school in the US.

I think an entire generation of students in England and Wales who now are paying up to £9000 per year of study would likely disagree with this.

While this is still less than many US examples, it's still a ton of debt for the average UK student who is unlucky enough to have an English or Welsh postcode (Scotland continues to offer free higher education). Especially so when you consider average graduate salaries in the UK.

The big difference here is that student loan repayments are based entirely on your future earnings. It is, for all intents and purposes, a graduate tax. The majority of people will not pay off their loan before it is forgiven, and many will never pay anything at all.

Student loans in the UK aren't real debt, though. It's more of a defined-contribution graduate tax with repayments contingent on earnings.

It's not debt.

American Finance loves debt because thats the most powerful instrument they have in business of wealth creation out of thin Air.

i.e Government Issues some Bonds -> Bank buys the bonds with bonds at interest, Federal Reserve print more green paper using the instrument of debt and we all(world) stupidly buy American green paper(Dollar) thinking it has value.

Few cycles, a economic crisis and a purge later they print more notes and cycle continues.

I'm from the UK and I use my credit card for 99% of my discretionary spending, mainly for the perks, but also section 75.

So the features in these challenger banks are largely useless to me, and I track all my finances elsewhere anyway

However, you can't put everything on a credit card in the UK, like household bills and rent, so you still need a current account for this. I use my Starling account for this and it works fine.

Some people don't have financial discipline so I'd imagine the credit card might lead to temptation, so they stick with a debit card to know exactly what's going on.

I find Curve to be more innovative because it is a debit card that links back to any debit or credit card. You can only carry one card, use your real credit cards in places that only accept debit. Plus - a fancy app and real time tracking for all your old bank cards. It's most of the upside from Monzo with your choice of cards.

> The rewards are usually pretty good and as long as you pay off your balance every month, you're getting ~3% of your purchases back in rewards/credit

So far as I’ve seen, most credit cards issued in Europe don’t have huge rewards like that because card networks are capped in how much they can charge merchants for card processing. Add into that a penchant for not acquiring open-ended (revolving) debt, and there you go.

Remember that those rewards in the States are paid for by relatively high processing fees charged to merchants (2.5% plus a flat fee of around a quarter) and the interest paid by people who carry balances. And that interest rate is regularly in the low to mid 20% annual rate range.

> So far as I’ve seen, most credit cards issued in Europe don’t have huge rewards like that

They do in the UK, which this article is about.

I have the best of both worlds here where all of my amex credit bills come out from my Monzo account and my salary is paid into my Monzo. The other features of the bank are what appeal to me personally, the fact that the UI is so much nicer to use than most other banks, as well as they are pretty progressive in terms of features. I can see when my credit card bills will come out (it warns you a few days prior with an estimated amount of the bill), and I can see rundowns of my spending, etc.

How does that work? Do you still get the purchases listed in Monzo somehow or do you mean you only pay the negative balance of the Amex card?

I’ve always found this bizarre as well. The amount of air miles/cash back/whatever my U.K. relatives leave unclaimed by purchasing everything on debit cards is nuts to me, not to mention the extra sales dispute options a credit card provides, often free insurance for rental cars etc.

The “Europeans are debt adverse” argument doesn’t really make sense to me either - if you clear your credit card balance each month this is in practice much the same to you as having purchased the same goods on your debit card, just minus many kinds of rewards or benefits.

The amount of money I receive in cashback via credit cards largely dwarfs any kind of interest I make on the cash in my household spending current account.

I don't use a credit card. I'm also 100% debt free. I don't purchase anything I can't afford up front. I'm also British.

I don't agree with the "rewards", which seem like a massive scam, which rips off everyone though higher prices irrespective of whether they pay by credit card or not, and I refuse to be a part in that. I likewise refuse to bother with any other dodgy scheme like mail-in rebates. Charge me a fair price up front, and I'll pay it in full, there and then. No silly financial games.

Within the echo chamber of my friends in London most now have a Monzo account. I would say 60% use Monzo. 20% perhaps use similar banks Revolut or Starling (though for some it is because they work for them). And perhaps 20ish% still haven't switched but all seem keen to.

Granted this is a very niche tech-savvy group of people between 20 and 40, but the established banks must be starting to feel the effects?

Most have a regular bank as their main account but like me hardly use it anymore, and some probably closed them altogether.

Though I am feeling more resistance from family and my non tech friends. But I think with time they will also try it and be converted.

I'm in the same demographic, same kinda of social group, and most of the people I know who use monzo still don't use it as the account where they store the bulk of their cash, it is more for travelling than anything else. The free (up to £200) withdrawals and inter-bank exchange rate make it a no-brainer for that, but there's still nothing about it which would make me switch away from a current account with a decent interest rate and added extras like insurance, or cashback on bills.

What UK current account do you have with a decent interest rate? By decent do you mean 0.02% or something?

Why do you care about interest on a current account? How much are you going to keep in there anyway?

Depends on individual and outgoing mine has 2-4k I am not aggressively filling my ISA's at the moment so it might as well sit there.

So even at an astronomical interest rate of something like 3% that's still not even really worth more than half an hour of time shopping around to get a better rate.

Well I am derisking and taking money out of my PtP other wise I could get 4% with zopa

I keep 3 months pay as emergency cash on hand in that account.

I think Starling is 2%.

Starling is 0.5% for balances up to £2000, and 0.25% for balances up to £85000

I use santander, which has 1.5% interest (not amazing, but better than nothing) + 3% cashback on phone and internet bills, 2% on utilities and 1% on council tax / mortgages, which adds up to significantly more than the interest over the course of a year.

> switch away from a current account with a decent interest rate and added extras like insurance, or cashback on bills

what. First, there are no offers with decent interest rates out there. Second, Revolut has insurance. Third, Monzo is so awesome that most people just use it even though it's a debit card.

you can easily get 3-5% on a current account if you shop around a bit, and are willing to put up with switching once a year (a bit much for me, but some folk will go to the effort for the sake of a couple hundred quid).

when I say insurance, I mean, for instance, when I had a halifax current account, they threw in AA coverage, and mobile phone insurance as part of having a current account with them. I'm not aware of any challenger bank that has extras like that.

I'm a millennial working in tech in the UK and I've never heard of it! I'll have to take a look. It'll probably turn up here in the North in three years like most new things.

They have done several events in Manchester already

You can tell they are starting to optimise for revenue rather than user satisfaction, though. They recently prevented you from loading your Monzo card via another debit card.

You mean they recently stopped you using a debit card to pay money into your bank account? Why would you do that? If you want to move money between banks you can do so instantly with faster payments.

I don't say that to be facetious, I think there's a difference of perspective here which is only going to widen if you think they are a prepaid card. They set out to make a bank, and started with prepaid cards, but that was never the end goal, it was just a way to test out the UI before getting a banking license, so expecting people to pay money in as you would to any other bank account makes perfect sense. This is not a prepaid card you load up, it's a bank account, and they don't want users to think of it as a prepaid card.

So I think their user satisfaction for people who want a bank account is doing well - as evidenced by their new customer growth. Can't wait to see them launch in the US market as it is also ripe for disruption and I think they have the scale and ambition to do well there.

I think the comment was around reduced usuability. It used to be if you wanted to move money into a Monzo account, you could do in all in-app, via a linked debit card.

This provided a nice usuable way to get money into the account from a "legacy" bank that doesn't have a good mobile story.

Now if you have Monzo + a legacy account (as many do) you have to go log-in to the legacy account to move money to Monzo.

Ofc once you go "full monzo" that's not a problem any more but it's still early days for that and Monzo have had enough service glitches to make people a little nervous of committing to having it as their only account, I think.

Other banks don't offer that (top ups via card), and I don't think it's something you should expect of a bank account - it was always a stop-gap. If you're using it for spending regularly and don't want to switch, just set up a standing order for a bit of money each week/month to try it out. I think as they want to become a bank this is part of that process - their focus needs to be on those who use it as their main account.

Personally I switched almost a year ago (when they introduced CA), and am happy with that choice so far - kept my old bank just in case but haven't needed it. Re outages many banks have had major outages recently, far more than Monzo... They had a few glitches early on (late last year), but I'm fairly confident of their ability to scale now.

It indeed isn't a common feature of bank accounts.

However it is a feature that Monzo had, which was easy to use and they got rid of it (IIRC due to the costs of providing it), which decreased usability, which I think was the original point the poster made...

It didn't decrease usability at all for those who use it as a bank account. It's certainly not a good prepaid card account but there are plenty of those.

True. And that's also the endgoal of Monzo: to be your main bank.

indeed. But Monzo is better than most (all?) banks and this is what people used to top up their cards before they removed the feature.

Wonder if they considered offloading the transaction fees onto users. I'd certainly pay for the convenience and would have continued using Monzo (Barclays copied the card freeze and atm locking so no need for Monzo, esp. with this).

Technically, as a workaround, you can create a monzo.me link and then make payments of up to £100 to yourself.

Nice hack, thanks!

I've been paying my wages in for about a year now.

Its been a flawless experience and I'll never look back.

From a technical perspective I think it could be easy to believe that because they're a startup your money is in someway less safe, or the service less reliable.

But I actually think that because of the sheer technical debt old banks struggle with (they're ticking time bombs on the inside) the opposite might be true.

Speaking as someone who used to top up by debit all the time, a couple of clicks in the app was far easier than switching apps, re-authenticating with my main bank and then making the payment. I don't blame them for doing it - apparently it was costing around £4 million in fees - but it's definitely harmed the UX unless you want to go full Monzo.

Sure, that sounds painful if that is what you were used to. Just out of curiosity, why did you not set up a standing order? If you're using it regularly surely this would work just as well? Seems annoying to have to constantly top it up with small amounts. Was that a commitment too far?

When I was transitioning I did a v. small standing order first for a few months and used it for spending, then upped the amount, then eventually switched over salary, direct debits etc.

For beta user, back when Monzo wasn't yet a bank account, the only to put money on it was to pay by card.

This was a habit that a lot of us had taken, and as described above, it was just easier to do all in one place: - Go check your monzo app - Notice you're low on fund - Top up using your card

A lot of us haven't switched completely, because why would you when other current account can give you travel insurance, small % of interest, etc.

> For beta user, back when Monzo wasn't yet a bank account, the only to put money on it was to pay by card.

This is incorrect - it was possible for a long time to top-up via bank transfer. Certainly during beta. It simply required using a shared sort code/account number with a specific numeric reference which tied the payment to your account.

It wasn't as instant as it is now (with Faster Payments), but it was still definitely possible.

I've pretty much stopped using Monzo after they removed the card topups.

I used to use it all the time while traveling, and usually top up on the spot when the funds on the account run out and I needed to pay for something.

Bank transfers really doesn't work for that use case.

Now I'm using Revolut for the same purpose (they still allow card top ups), not much difference to Monzo although I really, really like Monzo customer support.

If you liked it, I'd really recommend the built in current account transfer service.

I like it but not enough to change my current account

I already have a bank account I'm happy with. I specifically got the Monzo card as a prepaid card to use when spending abroad, which is what they originally sold as one of their key benefits.

to answer your question, you used to be able to "top up" your Monzo card directly from the app. It was really quick if you needed more money on the card. As someone else commented elsewhere, most people use it to pay for things, but still use another more ancestral bank to get their paycheck.

Now you need to go in your bank's app, log-in there, go through many menus (because banks which are not Monzo or Revolut have no clue about UX) in order to send money to your Monzo card.

It's still free, and instantaneous. It's just more cumbersome now.

They also removed the "no fee withdrawals abroad" and now you pay a pretty substantial fee (3%) above 200GBP per month. I might be wrong on these numbers but this is what I remember.

Sorry, that probably wasn't clear. I was trying to say this was a deliberate choice as they want to be a bank, not a prepaid card.

If they are your bank you don't need to add money periodically with a card.

The fee for withdrawals abroad is unfortunate but perhaps they'll be able to up the limit sometime.

oh yeah definitely, I got used to toping up via Lloyd's app and I'm fully supporting Monzo to grow.

> You mean they recently stopped you using a debit card to pay money into your bank account? Why would you do that?

That's the only way to get money into a Revolut account. That, Apple Pay or a SWIFT transfer which costs a fortune.

This was costing them millions of pounds a year in fees. Quite a pricey tactic to remove friction of funds flowing in and totally reasonable for them not to sustain it while pre/early revenue.

Edit: Bank transfers are instant in most cases and don’t cost Monzo. So we should do our part to help them if we want something better.

Bank transfers are pretty painful, especially when you need the top-up right away. I would happily pay for the card transaction for the convenience, if it's an unsustainable cost for them.

No, a better future is ahead of us: Monzo as your main bank. So let's pay this little friction price in order to get this better future.

One thing that bothered me more was the fee for withdraw abroads.

Revenue vs user satisfaction isn't entirely a binary choice though. If Monzo offer a feature which costs them a lot but offers user's some convenience, it's a bit of a balancing act to figure out what the convenience is actually worth. Debit card top-ups were costing Monzo millions per year, and seems to me to be only marginally more convenient than a bank transfer.

Debit card payment into a bank account is kind of an odd feature anyway, it seems like a bit of a relic from back when Monzo weren't a fully-fledged bank, and were just offering a prepaid card.

I imagine they are moving away from pre-paid cards, and towards full accounts. The pre-paid cards were just there to get them off the ground, and isn't their main focus anymore.

They recently released a savings "pot" (how they split up money) with interest (1%, provided by another company). Which is a step towards offerings of other banks, and in my book is a step towards user satisfaction.

Moved away - they shut down all the pre-paid cards earlier this year

https://monzo.com/blog/2018/01/18/future-of-prepaid/

Edit: More relevant link: https://monzo.com/blog/2018/04/04/ending-prepaid/

Everybody I know in the UK uses Monzo.

Monzo is even a verb as in "can I Monzo you?" or "let's split with Monzo"

It's just that freaking awesome.

Really? I live in the UK (London) and had never even heard of it.

This is starting to feel a bit like China Mieville's The City & the City, two worlds inhabiting the same space but never interacting...

Well, to be fair London is freaking huge. Depending where you live in London you mileage might vary. But now that you know about the "orange card" you might be able to notice it around you.

There are ads on the tube now so it's harder to not notice today. Before it was just the hot coral card that was advertising it and easy to notice, especially so when you have one. I remember last year when it was cool and special to see others use it, now it's just par for the course here in London.

I've never heard of it until reading this article!

Maybe I'm not the target demographic or something. Or is it only marketed in London?

Yeah, it's definitely achieved "verb" status in my social groups. Transferring between other monzo users is so incredibly quick and easy. Even people who aren't in your contacts list, with the bluetooth transfer feature. It's great.

I was Monzo Beta user, but switched to Revolut. Much more features.

I've got Monzo but am more using Transferwise. I prefer web based to app and they have some other advantages.

My friction with Transferwise (as a debit card beta user) is that you can't set up a standing order to fund it. You have to go into Transferwise, say how much you're transferring, then do the transfer (by logging into your banking app if you want a free transfer).

I'm using it for overseas expenses, but the time taken to fund it and keep an eye on it is outweighing the savings made using it.

If you have an iPhone and a debit account linked to Apple Pay, it's as simple as using your thumbprint to authorize a transfer. The fees are minimal and the money, converted at close to the market rate, sans a tiny fee, shows up in your account in less than an hour. really a revolutionary system when you compare it to opaque wire and bank transfers that I had to use 3-4 years ago when last traveling abroad

My card is now a full UK bank account and you can set up standing orders to pay into it in the normal manner. Unusually the account is multi currency and you can have linked accounts in like 23 currencies - I now have an Australian account number and sort code so aussies can make normal domestic transfers or standing orders to that in AUD. I'm not sure of any other banks that do that. Certainly not the regular banks, and my Interactive Brokers account is multi currency but AUD would go to the IB account for further credit to me rather than me having my own regular Australian account.

In fact if you want say a US bank account and don't live there Transferwise may be the easiest way to have one.

One small point to watch there is that AFAIK Revolut does not have a banking license so they're not covered by the FCA deposit protection scheme.

Not a worry unless they go bust of course, but one to be aware of ...

They have applied for a banking license, but that was like a year ago and haven't heard anything much since then.

Yeah it's a wonder why its taking so long. It's a great card to travel with but don't put too much money on it for this reason.

Why they seem to offer less than Santander 123 does to me.

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