Monzo introduces ATM withdrawal fees

Written by Ruby Hinchliffe
4th September 2020

Monzo has become one of the first major UK banks to introduce fees for ATM withdrawals.

Customers will – as of the end October – have to pay a fee when withdrawing upwards of £250 from an ATM, subject to a short list of conditions.

Monzo, like many of its UK challenger peers, is trying to develop new revenue streams to one day reach profitability

These fees will impact ATM usage in the UK and Europe, as well as outside Europe for all users.

What are the conditions?

These conditions depend on how much a user is paying in and out of their Monzo account.

The fees – which is 3% of the value withdrawn over £250 – will affect users who don’t do at least one of the following:

Pay in at least £500 every 35 days and make at least one direct debit from their account.
Receive a Department for Work and Pensions payment of at least £500 every 35 days.
Pay in a student loan payment every eight months.

Those who do one of these three things will not be charged a fee for withdrawing money in the UK of the EEA.

But all users will be charged a 3% fee for withdrawing more than £200 outside of the EEA. For Monzo Plus users – those that pay £5 a month – the 3% fee will only apply to cash withdrawals over £400.

Thinking behind the fees

Monzo, like many of its UK challenger peers, is trying to develop new revenue streams to one day reach profitability.

This year has set many challengers back at least a year in their profitability targets. Chetwood Financial told FinTech Futures last month that if it wasn’t for COVID-19, it would be “well on the way to profitability”.

The CEO hinted that the challenger was initially on track to turn a profit in the next year.

Monzo makes the majority of its revenue from card fees. Of its £36 million in net income in the 12 months to February 2020, the majority – £29.4million – came from card fees.

It said in its latest financial results that users kept just £357 in their account last year on average. As an extension of this, Monzo customers only withdraw around £36 a month from ATMs.

It claims “around 20% of customers make up more than 80% of our cash machine costs”. This suggests how many of its 4.2 million users might be affected by the new fees.