Revolut has announced the introduction of fees for free account users. This will anger customers and is a perfect example of how to botch an opportunity.
The noise surrounding U.K.-based digital bank Revolut has just become a fair degree louder in recent days: the company announced to its free-account customers in an email that the days of using a service free-of-charge were numbered.
We’ve been talking with thousands of you about how we can help you get even more from your money, was the introductory statement. The remainder of the letter was devoted to how Revolut was going to make more money from serving its clients.
And that’s why it will introduce forex fees on August 12, 2020. From that day onwards, sending money abroad will cost $1.06 for a transaction in the respective country’s currency, 4 francs for transactions in the dollar, and 6 francs in any other currency – for instance, if you wish to send pound sterling to someone in Brazil.
Furthermore, the upper limit for free exchange orders will be lowered to 1,250 francs and the percentage charged for orders on weekends increased to 1 percent from 0.5 percent.
That will anger a substantial percentage of the bank’s clients. A large majority of Revolut clients have used the services of the digital bank to make foreign payments precisely because costs were low and fees almost inexistent.
So to introduce fees for a service that has been advertised as free of charge is more than just a little ironic. It smacks more of how you’d expect a normal bank to behave and not a fintech. At least if you held a similar view of banks as the founder of Revolut, who had launched his company precisely because of such actions.
It is also poignant at what point of time the company has chosen to announce the changes. Revolut, which has been typically bullish about its performance, seems to have been forced to raise the fees because of a drop in revenues during the pandemic lockdown.
Revolut CEO Nikolay Storonsky in May claimed that the bank was awash with money after a recently concluded financing round and that he considered making acquisitions. That was shortly after reports about the departure of more than a dozen of the bank’s managers and the announcement that it would cut 60 jobs.
A further 50 jobs are on the line in Poland and Portugal, according to a report, an online magazine. And the way of disposing of the workers raises some questions: ex-employees have said that they were called into their manager’s office one morning and told to choose between resigning or being sacked.
And the rest of the staff were said to have received one part of their salary in recent months in stock, more or less voluntarily.
Revolut is using such methods to reach its goal of profitability by year-end. The corona-crisis looks to have hampered its efforts. Revolut seems one of the very few payment fintechs not to have profited from the stay-at-home message that boosted online shopping.
