If you’ve ever wondered How does Monzo make money?, you’re not alone. Monzo, the popular app-based bank, seems to offer numerous features, including fee-free card payments,s, free ATM withdrawals, and even a free basic account without the usual charges you’d expect from traditional banks. So, how does it stay profitable?le.
The answer is simple: Monzo has found smart and innovative ways to earn money that don’t rely on the old-fashioned fees banks charge their customers.
From interchange fees to business accounts, loans, and even energy switching, Monzo generates revenue by offering useful services that make life easier for users. And the best part? They manage to do it all while keeping things affordable and transparent for their customers.
How Monzo Works: A Modern Bank for the Digital Age
Monzo isn’t your typical bank. In fact, it’s not really a bank in the traditional sense at all—it’s more of a banking app that gives you full control of your finances right from your phone.
Unlike traditional banks, which have physical branches, Monzo operates entirely online, allowing you to manage your account anytime, anywhere.
Setting up a Monzo account is simple and free. You can open one in just a few minutes on your phone, with no need for a visit to a branch. Plus, Monzo makes banking feel less like a chore.
Need to check your balance, pay a bill, or split a dinner bill with friends? You can do it all without ever leaving the app. That’s one of the reasons Monzo has a large number of customers—over 7 million users trust Monzo to manage their money.
While Monzo doesn’t charge the typical fees that old-school banks do, it still manages to make money. But how? Well, Monzo earns through things like interchange fees, that is, when you swipe your Monzo card at a store.
Every time you use your card, Monzo gets a small cut from the business where you made your purchase. This is a major way Monzo makes money.
A Brief History of Monzo
Monzo didn’t just pop up out of nowhere. It started as a small idea with big dreams of changing the way we think about banking.
Founded in 2015 by Tom Blomfield and his team, Monzo began as a mobile-first bank, meaning it was designed from the ground up to be used on smartphones, not in physical branches. The goal was simple: make banking easier, more transparent, and more user-friendly.
In just a few years, Monzo went from a small project to one of the most popular digital banks in the UK. With millions of users, Monzo’s valuation skyrocketed, drawing attention from investors and financial experts alike. This rapid growth raised some big questions—like how does Monzo make money if it’s not charging the typical bank fees?
In 2019, Monzo made headlines again when it raised a large amount of funding, boosting its growth and expanding its customer base. This helped the bank reach new heights, with Monzo’s number of customers now growing by thousands every month.
What’s interesting is how Monzo’s ownership has evolved over time. While it started as a small startup, it has attracted big-name investors, with Tom Blomfield’s net worth growing as Monzo’s value increased.
The ownership structure also shows that Monzo is moving away from its roots as a small venture and becoming a major player in the banking world.
How Monzo Makes Money: The Core Revenue Streams
You might be wondering, How does Monzo make money if it’s not charging the usual fees like other banks. The truth is, Monzo has gotten creative with how it generates revenue. Instead of relying on monthly account fees or penalty charges, it makes money through several clever and modern strategies. Let’s break down the key ways Monzo earns its revenue.
Interchange Fees: The Power of Your Card Swipe
Every time you use your Monzo card, the company makes a small percentage from the store where you shop. This is known as interchange fees, and it’s one of Monzo’s biggest revenue streams.
So, every time you tap your card at a café, restaurant, or online store, Monzo gets a tiny cut. While it may seem small, it adds up quickly when millions of customers are using Monzo every day.
Business Accounts: Helping Entrepreneurs Thrive
Monzo doesn’t just cater to personal banking business accounts are a big part of their revenue too. They offer small businesses a simple way to manage their money, and in return, Monzo earns through monthly fees for premium business services.
This has become an important revenue stream as more entrepreneurs look for easier ways to handle their finances.
Overdrafts: A Smart Way to Borrow
Monzo also generates money through overdrafts. If a customer spends more money than they have in their account, Monzo offers them an overdraft, but it comes at a cost.
While Monzo offers a fee-free overdraft up to a certain limit, anything beyond that may come with charges. This borrowing feature is not only helpful to customers who need a little extra cash but also helps Monzo boost its earnings.
Loans: Lending Made Simple
For those looking to borrow larger sums of money, Monzo offers personal loans. While Monzo doesn’t make money from the loan itself, they charge interest, which is how they generate revenue.
Their loans are attractive because they come with transparent terms and no hidden fees, something Monzo users have come to appreciate.
Savings & Interest: Making Money from Your Money
Monzo has also tapped into the savings market by offering interest on cash in savings accounts. They partner with other financial institutions to offer savings accounts that generate interest for you. Monzo takes a small cut of the interest, making it a win-win situation for both customers and the bank.