Digital business banking explained: Monzo

Monzo Bank Ltd is a digital, mobile-only bank, based and operating in the UK

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Digital business banking explained: Monzo. Source: youtube.com

Every business, whether big or small, needs a separate bank account. It’s essential for daily operations such as paying suppliers and logistics partners, accepting customer payments, taking out business loans, managing payroll, or paying taxes.

Choosing the best bank is not easy. Especially, since traditional institutions get serious competition from digital banks. The more services are available online, the more time and effort businesspeople can save.

Our series of articles will highlight alternative business accounts from the most popular digital banks to help you make your informed decision.

The first bank on our list is Monzo.

The company officially launched business bank accounts on 17 March, 2020. Before this date, they offered an extensive trial period, which lasted one year, and more than 2,500 business clients gained early access during this period.

Monzo business account features

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The first bank on our list is Monzo. Source: youtube.com

  • Joint management. You can give a selected circle of responsible employees access to your business account. Those may include CEOs or accountants. The accounts have customizable controls and simple approval management.
  • Connected tools. You can link Xero and FreeAgent (online accounting software) direct to the Monzo app.
  • Money division. The Pots function allows you to allocate account funds according to their purpose: taxes, office bills, etc.
  • Contactless Mastercard debit cards. You’ll receive multiple cards for your designated employees with Apple Pay and Google Pay connectivity.
  • Instant bank transfers and direct debits. Money transfers are managed through the app. Transactions are completed within seconds.
  • Notifications and support. You’ll get instant notifications about all incoming and outgoing transactions. 24/7 customer support is provided over chat, email or phone.
  • Quick sign-up. You’ll be able to sign up in a few minutes after providing some basic details about your business online. No paperwork is necessary.
  • Xero free for 6 months. Monzo has teamed up with this cloud-based solution. The offer is available for new users only, and for Monzo Business Pro customers.

Essential updates

Though features are quite basic at the time, 2020 has brought many anticipated conveniences such as:

  • Tax automation. Annual taxes are set aside and transferred to HMRC automatically on a regular basis.
  • International payments. Cross-border transactions are enabled.
  • Batch payments (web only). You can apply payments to multiple invoices in one transaction.
  • Organised expenses. You can categorize your business spending, sort it, and move between accounts.
  • Link for an invoice. Monzo.me will help you get paid by simply sharing a link.
  • Loans. Monzo is not offering business loans at the moment, so they’re working with Funding Xchange, who’ll connect you with multiple lenders ready to help you meet your business’ goals. So, if you’re a limited company, you can be eligible for a loan with this Monzo’s partner.

Most of the features are available for “Business Pro” clients only.

Availability & eligibility

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The services are currently offered only to UK residents over 16. Source: youtube.com

The services are currently offered only to UK residents over 16.

Monzo app works on either iOS or Android. Apple Pay and Google Pay are fully supported by the bank.

You can apply for Monzo Business account if you are a sole trader or a registered limited company by shares (LTD), based in the UK, and only pay tax in the UK.

If you’re an LTD, to be eligible your company needs to:

  • have an active status on Companies House (we can’t support dormant companies),
  • have an active company director (not disqualified) on Companies House,
  • have at least one person of significant control (this can be you) listed on Companies House,
  • have no corporate persons of significant control or corporate directors,
  • make money mostly from selling goods and/or providing services, not mostly from interest or investment income
  • be a tax resident in the UK, and no other countries.

Fees

Monzo offers two versions of business bank accounts, “Business Lite” and “Business Pro”, which are a free account and a premium paid-for one respectively. The free account is quite similar to the one that Monzo offers to consumers. Business Pro account has some extra perks and it costs £5 per month.

On the other hand, Monzo offers zero sign-up and monthly fees, free payments in the UK, cash withdrawals in the UK and payments abroad, free cash withdrawal abroad up to £200/month (then, 3% fee), but it charges £1 in cash at PayPoint. All transactions in a foreign currency are made at the current day’s MasterCard exchange rate.

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There’s no official information on the rates applicable to business entities owning Monzo’s accounts. Source: unsplash.com

About Monzo

Monzo Bank Ltd is a digital, mobile-only bank, based and operating in the UK. In April 2017 their UK banking license restrictions were lifted, enabling them to offer full UK current accounts (users can receive salaries, make direct debit payments and bank transfers, open overdrafts) in addition to already existing prepaid debit cards. As a result, prepaid debit cards were substituted by contactless Mastercards in 2018. The bank has about 2 million customers.

The institution is fully authorized in the UK by Prudential Regulation Authority (PRA) and regulated by the Financial Conduct Authority and the PRA. Client assets are fully protected by the Financial Services Compensation Scheme (FSCS), meaning that all your money up to £85,000 is guaranteed by the British Government.

In February 2019 it started the trial of the first 100 business accounts, more enrollments are expected by the end of the year. On 24 June 2019, the company announced that they’re slowly starting to offer more business accounts to people on their waiting list which approximately comprises 15,000 business owners. If you’re already on this list, wait for a notification in your Monzo app. If you haven’t got a Monzo personal account, you’ll receive an email instead.

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