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Monzo Business – In Brief
Founded in 2015, Monzo obtained a UK banking licence in 2017, and then launched their personal banking product in the same year. In early 2020, they launched their offering for businesses, and within 6 months of launch, they claimed to have signed up over 50,000 businesses. In this article, we will look at the key features of this business focused product.
Monzo Business Pros & Cons
- Monzo app is simple to use and has many features that save time
- Monzo is fully licensed UK bank so deposits are protected up to £85,000 per business under the FSCS.
- Great for sole traders and smaller business owners who can fully utilise the functions that make accounting easier.
- Monzo is a digital bank and has no branches, so any cash needs to be paid in via Paypoint, which incurs a cost – so if your business deals with a lot of cash then Monzo may not be the best option.
- You can only access the more complex functions if you subscribe to the paid Pro account tier.
- Monzo currently does not allow certain types of business to open an account, so it is best to check whether your business is eligible before downloading the app.
- Monzo is currently only open to users within the UK.
What is Monzo?
The Monzo business account is a smartphone app focused bank account, that offers various features that aim to make your business banking simpler, and the costs more transparent. Whilst the Monzo personal account is almost entirely app focused, with the business account, you can also do your banking via their website on a computer, which will suit users who want to bank at their desks.
The product is really aimed more at the sole traders or small to medium businesses. Many larger businesses will already have processes in place that mean they would likely not need features such as Tax Pots or Invoicing.
The Monzo business account has some fairly strict rules on what sort of company can open an account. Several business areas are not allowed, as well as certain types of incorporated businesses. You can see who can sign up with Monzo here.
Monzo Business Features
- Tax Pots – set a percentage of revenue aside for tax
- Integrated Accounting Software – includes Xero, Quickbooks, Freeagent and more
- Multi-User Access – multi-user access for their staff (Limited companies only)
- Invoices – generate directly from your Monzo account
- Mobile & Web Access
- Currency Transfers – via Wise at low rates
The Monzo business account is available in 2 tiers – Lite and Pro. Both these account tiers have the following elements.
- UK bank account
- Debit card
- Instant Notifications
- Savings Pots
- Free UK transfers
- Budgeting and spending categorising
- Mobile & web access
- Business Debit card
- Fee free spending abroad
Then the below features are only available on the Pro (paid) account:
- Tax Pots
- Integrated Accounting
- Multi-user AccessInvoicing
Who is Monzo Business for?
A huge amount of businesses nowadays operate almost exclusively online. Marketing and selling their goods, communicating with customers, suppliers and staff, and nearly every other function, operates in the online space. And in addition, the majority of this interaction is performed via a mobile device.
Therefore, it makes sense that banking can also be done in this way. All banks, including the traditional high street banks like Lloyds, Barclays etc, have moved into the space (some more successfully than others!). However, these old banks who have built up their businesses over decades, if not centuries, have massive internal procedures and systems that they need to build any technology on top of, to allow their customers to access banking functions.
Monzo, like their competitor fintech banks such as Starling Bank, Revolut and Tide, don’t have these issues. They have built their platforms in the last few years, and thus they have taken advantage of all of the new technology, without having any legacy systems that can tarnish the user experience of their apps.
Therefore – it is not surprising that the new app focused banks do often have a far smoother user experience than many traditional high street banks.
Monzo, like the other app focused banks, do seem to be more focused on smaller businesses, as many larger businesses will have bookkeeping or accounting staff that will already do many of the processes that the app banks make easier.
Monzo is a branchless bank, and as such, cash can only be paid in via Paypoint locations. There is a charge for each deposit, and there are quite low limits to the amount you can pay in, so Monzo may not be the best choice for a business that deals with cash.
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Monzo Business Costs & Fees
There are 2 account tiers for Monzo business:
- Lite – Free
- Pro – £5 per month
In addition to the above, there are various costs for functions within the account:
Paying in cash: Customers can pay in cash to their Monzo account at any Paypoint location. Monzo charge £1 for each cash payment. Each business can only pay in a maximum of £1000 every 6 months.
ATM withdrawals: Up to £200 in cash per calendar month can be withdrawn. Above that amount, Monzo charge 3% of the amount withdrawn.
Is Monzo Business Safe?
For each business with an account with Monzo, their deposits are covered up to £85,000 under the UK’s Financial Services Compensation Scheme (FSCS).
Monzo is a start-up business, and as such it is not yet profitable. Indeed, in 2020 it reported that it made losses of over £111 million in the year to July 2020, largely because of the pandemic. Whilst it is not uncommon for start-up businesses to make losses, business owners check the current situation and make themselves aware of the current situation with Monzo before committing their funds to them, as even though deposits are protected up to £85,000, if there were issues, then it would likely cause business disruption.
Monzo Business Comparisons
Which is better – Monzo Business or Starling Bank Business?
Read our full Monzo Business vs Starling Bank Business comparison
Which is better – Monzo Business or Revolut Business?
Read our full Monzo Business vs Revolut Business comparison
Which is better – Monzo Business or Tide Bank?
Read our full Monzo Business vs Tide Bank comparison
Monzo Business FAQ
Can you pay cash into Monzo Business?
It is possible to pay cash into your Monzo Business account via all PayPoint locations. However, it costs £1 per desposit, and businesses can only pay a maximum of £1000 into their account in every 6 month period. Therefore, if you business deals with a lot of cash, then it may be better to look at other business account options.
Are Monzo Business accounts free?
Monzo Business does have a free business current account. However, to get all of the useful features such as tax pots, integrated accounting apps and invoicing, you will need to subscribe to Monzo Business Pro, which costs £5 per month.
The Monzo business account offers a modern, efficient solution for businesses to manage their banking, that could significantly save time, especially for sole traders and small businesses.
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