You may remember that a few years ago I wrote a positive review of Revolut, the fintech startup that provides payment cards with stored value and no foreign transaction fees. I have been using it for a long time by now, and had mostly stood by that review, until the second half of last year, where things started to appear more complicated. Given the current flurry of stories on the company, from silly advertising shenanigans to uncovering of poisonous working conditions, I thought it would be a good time to write some more up to date words, as I don’t think I can recommend Revolut as much as I did before anymore.
First of all, I started feeling uneasy recommending Revolut since they started down the path of selling cryptocurrencies as an added-value feature. I hold a personal belief that participating in the trading of Bitcoin and other similar “currencies” is unethical (see Thomas’s rant on the topic), and I don’t like being associated with companies focusing on them. I have looked the other way for a while, though, because I knew that using the words “cryptocurrency” and “blockchain” make money appear out of nowhere for most startups, even when there’s no rhyme or reason for it. I just had a bad taste in my mouth for this.
The problem is that Revolut, even when I had the Premium version, built something very cool, but a bit rough around the edges. And as a customer, it is annoying to see them jumping the shark onto cryptocurrencies, instead of making location-based security actually reliable, implementing 3DSecure/VBV integrations, or finding a way to get a proper banking license and FSCS insurance (all of which would be requirements for me and most people to use Revolut as a replacement for high-street banking).
Instead, what we see is that Revolut is adding “features” trying to upsell you into their premium services. This is not entirely bad, because you need paying customers to run a business. Unfortunately my impression is that they offered and offer so much on their free tier, that they are tackling on random stuff that has nothing to do with banking itself, just to get people to sign up for their Premium and Metal tiers.
As an aside, I still don’t understand this trend of providing heavy (“18g” as they boast some companies) metal cards. The last thing I want from a credit card is to be heavy, as I barely even want to have to take it out. I’m all in favour of the trend of not embossing the name and number, preferring to print it on the back, but it does not need to be metal for it. Indeed, Curve (that I’ll get again in a moment) did exactly that.
We’ve just come back from a trip to the Continent, and what we did notice that Revolut tried to upsell us medical and travel insurance at every change of country (even when we just connected flights through third countries). This is not just annoying as we’re not interested in it (we’re European citizens, visiting European countries, and work provides both of us with a basic travel insurance), but it’s also annoying because it makes use of the location information, which I provide for the security feature, for marketing. Similarly, I recently had more notifications about them trying to upsell me Metal than actual transactions.
For a while, I actually did pay for the Premium service. Mostly under the idea of “putting my money where my mouth is”, that is to make sure that the company could keep operating a service I loved. Unfortunately it turned out a bad idea: not just because Revolut cannot replace a high street bank in the UK (no FSCS to protect your account, no BACS direct debits, etc), but also because the Premium “perks” were not something I cared about, and the dedicated service team was still useless when it came to even telling me the top-up limits when I changed the card I used for top-up.
If you already have two physical cards (and paid for it), you need to pay to replace one of them with a Premium card, if you so wish (but it gains nothing but a different colour, so I never did that). The unlimited exchange is not particularly useful when you already don’t reach the free tier’s spend, and the ATM limits is only useful if you plan to actually use cash, which I really try not to. The one interesting feature that is advertised for Premium customers, but as far as I can tell is also present as a one-off charge for non-Premium one, is the disposable virtual card, that changes PAN every time you use it. But even that is not as secure as it looks, as I’m told that vendors are still able to charge again a disposable card that already changed number.
Okay admittedly there’s the travel and medical insurance, but as I said earlier, I get a better travel medical insurance from work (and probably there’ s better out there) and a credit card such as American Express would provide a better baggage/flight insurance. This is very subjective of course, it’s well possible that for other people, with other employers, and in other countries, these insurances are actually worth it.
Speaking of circumstances, I think I might not have felt so strongly against Revolut if I was still in Ireland. Not just because they seem to have implemented SEPA DD Core support, so you can actually use it to pay your bills there, but also because the alternatives of high street banking there are significantly worse than here.
In London, I now settled on Santander as my primary bank, both for the current account and for a 0% foreign transaction fee credit card, their All-in-One Credit Card. These come to £5 per month for the account, and another £3 per month for the credit card (compare against Revolut’s premium at £6.99 and Metal tier at £12.99), and while the free foreign ATMs withdrawal are limited to Santander’s own network (limiting the countries you can use them on), this is a full-featured, FSCS-insured account, with cashback, retailer offers, and active interest on the current account’s deposit. If you don’t want (or can’t afford) a credit card, Metro Bank offers 0% foreign transaction fee for European transactions on their free accounts’ debit cards. And I’m sure that other banks have similar arrangements all over the place. Basically, the UK has a significantly wider range of offers, that make Revolut less necessary than in Ireland.
But even for Ireland, and for other countries that do not have such a selection of high-street banks, Curve – that I complained about before – decided to change their target marketing a bit, now offering a “front” for any Visa and MasterCard card to provide 0% foreign transaction fee, with their premium option existing to raise the limit of monthly transactions. That would have been something awesome to have when I lived in Dublin, to keep getting Tesco points, while not paying the 1.75% of foreign transaction fee on their credit card. (If you are interested to try that, my referral code is BG2G3).
Both Curve and Revolut have a Metal card with which they provide cashback. In the case of the former, these are retailers-limited, and I can only assume they are based on some third party’s selection of perks, as the retailers are pretty much the same that Santander and Lloyd’s provide retailers offers for. Revolut instead provides cashback on all spend, 0.1% on European spend, and 1% for non-European spend (although there does not seem to be an obvious definition of Europe on their marketing material, I assume it’s deep into the terms of service).
While cashback is always a nice bonus, it only makes sense if you can break even on the cost of one’s service by spending. With Revolut Metal, that would be an astounding £13k (thirteen thousands pound) per month in European spend, or £1299 of non-European spend. I do know some extremely frequent travellers to the States or Asia that would be able to spend the latter, but that’s more of an exception than a rule. And if you can spend the former, you probably can get more than that in interest by keeping the money in an active-interest current account, and paying with a normal credit card.
For comparison, Santander’s card I linked above costs £3/month (you don’t even need their bank account). It has 0% foreign transaction fee on all spend. And a cashback of 0.5% (five times Revolut’s European cashback) on all spend. It takes only £600 a month to break even, and that’s without counting additional retailer offers, or additional perks from their current accounts.
And even if you look at American Express (which is never considered a cheap option) and their cashback options, the numbers are significantly different. Their Platinum cashsback card is £25 per year, and includes a better travel insurance, 1% cashback on all spend to £10k and 1.25% over that. Plus retailers offers and supplementary cards for the family. Although be warned if you want to go down that road, that American Express charges you 2.99% foreign transaction fees, for every single one of their cards in the UK.
I was going to take a detour talking about foreign transaction fees, but I will leave it for another post, because it’s a lot of content, and a lot of explanation to be done there.
So the final words of this post are: I’m not sure I trust Revolut anymore. They seem to be taking “marketing risks” to get people to pay for services, but at the same time there’s very little value in their paid services. I don’t think that the company will be able to sustain the current trajectory without venture capital money, and I find scary the idea of relying on a VC-funded pseudo-bank for my own money.
Update (2019-03-27): just a few days after I wrote this blog post, I received two email from Revolut, with widely different content, that I think merit a bit of description, thus why this update.
The latest email is an announcement of new details (new sort code and account number) for their GBP accounts. This is effectively a change in intermediary bank that maintains the GBP account proxies for Revolut. Nothing particularly eventful in by itself, but there are a few notable things. The announcement is declared “great news” for their customers, but it also highlight yet another feature that high street banking would have, and Revolut lacks: redirections.
When you switch bank account with a high street bank, the bank will take care of moving standing orders, direct debits, automatic salary payments, and redirect any transfer to the old bank account to the new one. Revolut is instead telling all the customers that they have to deal with all the required changes of both payment and transfer. Not just that, but they don’t appear to guarantee any specific grace period in which both accounts would exist: they say that the new details will appear in the app before May 22nd, which is when the old account will stop working:
⚠️ Your old account details will stop working from the 22nd May 2019. Revolut email arrived on 2019-03-27
Salaries and standing orders
If you receive your salary into your Revolut account, you’ll need to send your new account details to your employer before the 22nd May. Again, we’ll let you know as soon as they arrive.
For standing orders from your external bank to your Revolut account, you’ll need to update your bank with your new details before 22nd May. For recurring payments set up from your Revolut account to another bank, you don’t need to do anything.
To give you an idea of time frame involved, the company I work for freezes the salary payment details around the 5th of the month for payments on the 25th. This means that if the new details arrive after 5th of May, and you’re paid monthly, you may be unable to receive the salary. Hopefully, the old accounts would just reject the transfer, but even in that case, retrieving the missing salary can easily take two weeks, which for a number of people would be a significant risk.
For comparison, the previous email I received just twenty hours before, also from Revolut, had as subject «👕Should we release Revolut merch?». This is a company that just before announcing a significant disruption of service, that a high street bank would never subject their customers to, asks whether you would like to wear their brand around, making yourself not just a product, but a walking billboard.