Given the amount of words I have spent on payment cards you would expect that since starting to use Revolut last year I would have already written about it. But almost every time I started writing about it, something else changed that made some of my points moot. I think it’s time to break silence.
For those who have not heard yet, Revolut is an UK company that fits into the current profile of FinTech companies. It all starts with a mobile app, that allows you to sign up for their service, which effectively is an “electronic wallet” (or bank account). When you confirm identity, you can get sent a physical MasterCard payment card for a smallish fee (the fee was not present when I signed up – which is why one of the things that confused me when I suggested this to friends, the other being that it appears to be different country by country).
While at first sight this might look like one of the many prepaid debit cards that exist across most of Europe, the most famous of which, in Italy, would be PostePay, it turns out to have a number of technical differences. The first of which is that the card is a MasterCard Prepaid, rather than a MasterCard Debit, which has both good and bad sides to it: it can be used where debit cards usually can’t (e.g. hotels), but it also can be charged extra (e.g. by Ryanair).
The main advantage over the classical debit (or credit) cards is that the company built the payment system as a mobile-native platform, rather than bolting on mobile apps as an afterthought like effectively any other consumer bank I have used. In particular, the security of the card is tied to the app itself: from the app itself you can configure the card, allowing or disallowing transactions made with the magnetic stripe, the contactless payment, or “online” (card not present), as well as whether you want to allow ATM withdrawal, and whether you want to make use of Revolut’s Location Security feature – which is honestly my favourite feature.
This feature relies on the fact that the phone’s location is known to the company through the app, and they can take that into account when they decide to approve or reject a transaction. In most cases, this is exactly what you want. When my Tesco Bank credit card got skimmed, the fraudulent transaction that had them notice was made in New York, while I Was peacefully sleeping in Dublin. Unfortunately this feature is still a bit fragile, and relies on you having connection when you travel, and sometimes it takes more time than you’d like to realize that you have been travelling. For instance I had to disable location security to enter the DLR from London City Airport, after landing (for those who don’t know the airport, it takes less then 10 minutes walking from landing to public transport).
The good thing is that all these settings take effect immediately if you have Internet connection on your phone, so in most places in Europe, where the transaction happens with you holding, or eyeing, your card, it’s easy to just open the app, disable location security, and retry the transactions. In the USA, though, things are more interesting, as in most restaurant you just give the card to a waiter and they’ll run the transaction for you at the till. And if you have a mistake in the way the terminal is set, so that paying at, for the sake of example, a Mexican restaurant in Pittsburgh would appear as coming from Columbo, then you’re going to have a bit of a headache.
In addition ot the security features, the other reason why the Revolut card is a good fit for travelling is that they offer a 0% foreign transaction fee, and so-called interbank rates for converting to whichever currency you have your balance in (it supports euro, sterling, US dollars, and, added between me writing the draft and posting this, Swiss franks and Polish złoty). This is an improvement over the 1.75% of Tesco Bank and 2.75% of Ulster Bank (approximate, this is the rate for VISA cards; since my Ulster Bank card is MasterCard the fee is variable, and it’s more complicated to calculate).
The interbank rates are very hard to judge, but I have some data points, although for now mostly biased. When I went to London last, in April, I used at different places both my Tesco Bank card and Revolut, so I can compare the rate that they gave me: £0.8569 for Revolut vs £0.8531 (effective, exclusing transaction fee, alternatively £0.838 as declared by Tesco Bank in the statement, which includes the transaction fee). This is biased, since both cards are actually UK-based, so Sterling might not be the right currency to compare on. I’ll be able to compare Chinese Yuan Remibi next month, when the Tesco Bank statement arrive. The other comparison I was able to make was with my company card by Citi, but that’s unfair. For what it’s worth, it’s within reasonable variation, sometimes with Revolut standing on the better side.
If I have such a bright opinion of the service, then why did I not write about this before? As I said, there has been a few things that changed, and a few snags, that got me wary about writing about it too quickly. The first problem is that Revolut’s start looked a lot like Number 26 (now N26), the German bank that promised very similar features, although with a different setup. In particular, I don’t remember them having location-based security features, but on the other hand, they did give you a full IBAN you could use to wire money to directly, or issue SEPA Direct Debit against, assuming your provider was happy to accept said requests.
This is a problem particularly when you realize how bad a job they made of security (those particular problems addressed since then, but t’s still hard for me to trust them). But as the talk points out, it was an obvious answer to say “Well, okay, but I only keep €50 on it”; the same answer I could have given Revolut. Except that N26 first, and now Revolut, both allow you to ask for credit. And that makes the accounts a much more interesting target. I really wish Revolut had an option to say “I don’t want credit, please never provide credit to this account” – but alas that’s not the case right now.
There are more issues. In at least one case, I got scared and pissed at Revolut because after a payment at Red Rock, the exchange rate, the charge in dollars and the charge in euro did not match at all. Indeed the value of the charge in euro was almost double the dollars, which made no sense! Some bickering on Twitter about it, we could confirm the problem is that the Red Rock payment terminal does a pre-auth for the base total of the receipt, and then confirms the transaction with the amount including the tip. The Revolut app knows to update the total in euro with the settled amount, but it does not know to update the amount in dollars, unless you logout and log back in. Which requires you have access to your phone number to receive SMS. I noticed this during my trip in January; the bug was still present in April, when I visited London.
There is another problem with aesthetics. Since the names of credit card charges are usually difficult to decipher, as they appears to be still written in the same flat-file format as made popular by AS/400, the app tries to give you an easier tell of what a given charge is. The internal tracking of the transaction type is translated to one out of a handful of options such as Shopping, Groceries, Travel and Transportation, and the logo of a recognizable vendor is provided to make it easier to tell who’s charging you. This works great for things like Starbucks or McDonald’s, but it’s a bit less useful for Amazon, as it’ll bundle marketplace, Comixology and other third party Amazon Payments, but you can survive. The problem is that sometimes it’s completely wrong.
I assume the problem is that they do some fuzzy matching, as different pathways through the same charging entity may appear differently; that is the case for sure of Amazon, but as I also found out, of Uber, even within the same country. Starbucks and McDonald’s have at least the excuse of using different processors for different stores or at least countries.
More concering is the way they handle the breakdown by vendor in their Spending Analytics feature. The feature itself is actually pretty cool, and gives you an idea of how much you’re spending where, although for me that is only a very partial figure, as it does not factor in the other three cards and three accounts where other charges happen. The problem is not that, the problem is with companies such as PayPal, Square, or iZettle. These are intermediaries that don’t usually let their customers set the whole charge line, but rather only allow personalizing the suffix of the line. Most of these use the asterisk symbol (*) as the separator, so you have things like
PAYPAL *STEAM GAMES or
What happens is that Revolut bunches together the “sub-vendors”, which is consistent with their fuzzy matching. Unfortunately they do not drop the suffix, just showing Square or Iz (they do that for PayPal), but they actually show an unrelated sub-vendor, probably the first charge they saw from the intermediary with the given charge type. Oops.
Finally I have one more concern, for now. While the card security is clearly improved by the location awareness, and the ability to enable/disable various payment options – including, finally, the contactless payments! – it appears Revolut did not actually set limits on how much vendors are allowed to charge you over contactless. As it happens, most terminals have limits imposed by the banks, which are often lower than the customer limits, or at best equal to them, but Revolut does not appear to have such. In Ireland, that limit would be between €25 to €35 depending on the bank, when using a physical card (Apple Pay and Android Pay use the same protocol but are considered different); in the UK, that would be £25 to £40.
I got very confused when in Hong Kong I bought my usual Starbucks souvenir mugs and a bearista, for a total of just shy of HK$500, and a contactless payment worth €57 was approved by Revolut with no issue! After contacting them on Twitter they said the limits are per-country, and quoted a CAD $100 limit in Canada. I asked them if they can provide a table of limits, so one can decide whether to leave contactless enabled or not in a card when they travel, but they have to look into it. The limit in Hong Kong appears to be around HK$1000, which is around €117, almost double the Canadian one.
This is of particular importance for a card that declares itself Sterling, by default, because it was not even three years ago that the foreign currency vulnerability got published in almost all the papers (including the Daily Mail, but I won’t link to that). And the fact that Revolut does not appear to have a proper published plan to deal with this bothers me more than a little bit.
All in all, I’m fairly happy with the service. I ended up getting an extra virtual card, which I use online almost exclusively for Amazon (but I have used it for other things including the China Eastern flights to Hong Kong, particularly as Tesco Bank refused the transaction). I calculated that just in the 1.75% foreign transaction fees on my Amazon UK orders (remember: the is no Amazon Ireland), the €6 fee was being paid off quickly.