Monese review: is it the best bank for your money?
Monese was one of the first app-only banks to launch in the UK.
The challenger brand was founded by Norris Koppel who found he was unable to open a bank account due to having no UK credit history or utility bills. This is a problem shared by many people who do not have loans or credit cards or who have recently moved to a new area, making it impossible to receive a salary or pay bills. Koppel decided to set up his own 100% mobile current account in 2016 and it now has more than 500,000 customers processing more than half a billion transactions. It has also been recognised as the best challenger bank at the European Fintech Awards and has received €1.1m of funding from the European Commission for research and innovation.
How does Monese work?
A Monese account can be opened by anyone living within the European Economic Area (EEA). You can either open an account by downloading the app through your smartphone or by using a link sent to your device via the Monese website.
There are no high street branches so you don’t need to trudge into town to open an account. You just need to get online, download the app and follow the step-by-step instructions. Unlike mainstream current account providers, you won’t need to provide a local proof of address or have a good credit history. You will be asked to take a selfie video using your smartphone’s camera and to snap an ID document such as a passport issued by any country in order to pass Monese's money laundering checks. The Monese system will then verify your identity and you will receive your account number and sort code within minutes. This is much faster than a mainstream bank, where you may have to book an in-branch appointment and then wait for your card to arrive in the post.
You can immediately send and receive payments but will need to order your contactless MasterCard debit card through the app. Monese users still have to wait for their card to be delivered, usually within three to five business days or up to 14 internationally. Once it arrives, you can set up the card through the app using a four-digit activation code.
The Monese debit card has the same functionality as any other debit card. You can shop online, make in-store purchases, make ATM withdrawals anywhere in the world and use contactless payments. You can make top-ups, change personal information and access bank statements through the app at any time of day.
The app also supports Google Pay, letting you make contactless payments with your phone, and is in the process of adding Apple Pay. You can also access lower cost foreign currency exchange and international money transfers as Monese uses the interbank rate rather than setting its own fees.
What products does Monese offer?
There are three types of Monese products, all offering free card usage and direct debits in your home currency.
The default plan is the Starter package and provides a current account with no monthly fee, but you have to pay £4.95 if you want the contactless debit card. ATM cash withdrawals cost £1 and it will cost 2% (with a minimum £2 fee) to make cash top-ups at the Post Office or 3% (with a minimum £3 fee) to do so via a Paypoint. There is a fee of 0.35% when using a debit card to make a top-up from the EEA and a 2.5% charge for those outside the EEA. Starter users also pay a minimum 2% base forex rate fee (with a £2/€2 minimum charge) when using the card abroad, using an ATM abroad or making international bank transfers.
More active users can go for the Plus package at £4.95 a month. This gives you a free debit card and six free ATM cash withdrawals per month, but you are charged £1 or €1 each time after that. Top ups are cheaper than the Starter plan, at 2.5% through Paypoint and £1 at the Post Office in the UK. There is still a 0.35% charge for instant top top-ups using a debit card. However, users pay cheaper forex charges at 0.5% (with a minimum of £2) on international bank transfers, overseas shopping and ATM usage.
Its most expensive product is the Premium package at £14.95 a month. This gives you a free card as well as unlimited ATM withdrawals, free instant and cash tops and nothing to pay on forex.
Pros and Cons of Monese
The main benefit of Monese is the competitive and in some cases free currency exchange and international money transfers (but you do have to pay for the privilege). This will benefit those travelling regularly either for work or pleasure or if you move from abroad and want to send money back home (Revolut is still probably the better option in this regard - read our full Revolut review). Monese users benefit from a faster way to set up their current account than with a traditional bank. Also, everything can be managed via the app without having to go through call centres or branches which is beneficial if you are constantly on the move.
There are some perks if you can recommend friends to Monese. If you invite a friend via the Monese app and they top up at least £10/€10, then you’re both eligible for a reward. You will receive £10/€10 which will be allocated to your account within 48 hours after your invited friend has topped up their account. As a welcome gift, they will also receive £5€ /5€ allocated to their newly created account.
The downside is that if you want the best benefits, such as free cash withdrawals, you have to pay the higher £14.95 monthly fee. Also you have to pay just to get the debit card or use a cash machine on the basic package.
Unlike other current account providers, there is no authorised overdraft facility or business account, although Monese is working on this and invites any firms interested to register online.
There is no minimum amount needed to fund the account, which many mainstream banks require, but there are some limits to usage with Monese. The maximum you can hold is £40,000. There are also limits on how much you can top up each day, at £500 through the Post Office and £249 per transaction with PayPoint (with an overall limit of £500 per day). When using a debit card to top-up there is a £1,500 instant top-up limit per day and £3,000 per month. You can only withdraw a maximum of £300 per day via an ATM (which is fairly standard in the banking industry). Card payments are limited to £4,000 per transaction and £7,000 per day.
Some users have posted concerns in online forums about their accounts being locked. Monese says this can happen if their balance becomes negative or if a request for payment was delayed. Monese says many users find their balance goes negative if they use the card regularly for public transport. There are no fees for a negative balance and the 'locked-out' situation can usually be resolved through its live chat or contact centre. Users can also be locked out of their account by entering their password incorrectly too many times. In this situation, you can get a temporary passcode through the Monese support line. All card payments are also automatically blocked when the card PIN is entered incorrectly 3 times. This block affects all payments, including online use and contactless payments and the card becomes usable again, with the correct PIN, automatically after midnight of the day it was blocked. You can always check your card PIN in the Monese application on your phone, which is useful.
Is Monese safe?
Unlike mainstream banks, your money isn’t covered by the Financial Services Compensation Scheme (FSCS), which covers up to £85,000 of savings if a provider goes bust. However, Monese is regulated by the Financial Conduct Authority as a registered agent of electronic money institution PrePay Technologies, which follows Electronic Money Regulations. Under these rules it must separately store and protect 100 per cent of customer funds, keeping it separate from their own finances.
How does Monese make money?
Monese markets itself as a lower cost current account provider without any hidden fees such as on unauthorised overdrafts. But it still has to make money. It will earn interest on deposits, known as treasury income. It also gets paid from the interbank rate paid on forex fees and in some cases on top-ups and withdrawals as well as for the monthly charges it makes for its Plus and Premium packages.
Monese is not the only digital-only bank. Its closest competitor when it comes to international use is Revolut, which offers free card transactions in 120 countries, fee-free transfers at the interbank rate in 23 currencies and free ATM withdrawals up to £200 a month followed by a 2% fee. You can also buy Bitcoin, Litecoin and Ethereum cryptocurrencies through the Revolut app. It has a basic free package as well as £6.99 or £12.99 monthly packages offering extras such as higher withdrawal limits, overseas medical insurance and concierge services.
There are other app-only providers that offer extra services beyond international spending, particularly when it comes to savings. Monzo lets users track their spending and build separate savings pots within the app. Users pay nothing abroad, subject to a maximum withdrawal of £200 a month and 3% after that. It also offers free cash withdrawals and an optional overdraft.
Similar to Monzo, Starling lets you set savings goals and even offers interest on your balance at 0.5% up to £2,000 and 0.25% above that. There is no charge for having an account and nothing to pay on UK or international withdrawals, but you will need to pay the MasterCard exchange rate. Starling also charges 0.4% on international money transfers. There is an interest rate charge of 15% equivalent annual rate if you go into your arranged overdraft.
One more provider that is also worth looking at is Atom Bank. It was one of the earliest digital-focused banks to launch back in 2015. It has developed a strong name for itself in the best buy tables for savings rates, but it is still developing its current account. Once released, its popularity among savers may make it a strong rival in the digital-only current account world.
In a world where people are increasingly mobile, both in terms of where they live and work and how they transact, Monese definitely has a role to play. Its app is useful for those regularly on the move between different countries and who need to send money abroad. It is especially useful if you travel between the UK and Europe regularly as you can easily switch between a UK and European account.
However, it falls slightly behind the others by not offering an overdraft, interest or help with savings goals and it charges for some items that others will give for free. But the easy setup process makes it worth considering if you are struggling to get a current account elsewhere.
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