Sunday, February 28News For London

Multi-currency bank card to help cut travel expenses

Managing money while travelling or buying from foreign retailers online usually costs extra money. A virtual bank Revolut tries to cut such costs.

From cash to digital. Credit: FamZoo Staff
From cash to digital. Credit: FamZoo Staff

“Every time you travel abroad and pay with your debit card, you lose money – about 30-40 euros, depending on the bank you use, for every 500 euros. We allow people to save these 30-40 euros,” Nickolay Storonsky, the founder of Revolut, said to Westminster World. Revolut is a British startup launched in July 2015. 

The company produced a debit card with three accounts in different currencies – USD, EUR and GBP – and a mobile applications. Users need to download the app and order the card to be delivered home. The mobile application is used to top up in any of these currencies with a debit card or a bank transfer, and send money to other Revolut accounts.

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It takes more than seven days to get a Revolut card in London

The card is based on MasterCard and should work anywhere in the world. It supports 23 different currencies, meaning that even paying with GBP in Thailand is possible without exchange fees. When there is money on a Revolut account, pounds could be exchanged into euros (or any other combination) without any fee. Revolut promises interbank rates which are lower than rates for customers.

Storonsky launched Revolut in July 2015 and by February 2016 the service had over 100,000 users, mostly in the UK. Headquartered in London, the company is trying to win the hearts of British users first. For now, Revolut has 1,000 – 1,500 people joining every day, as Storonsky says.

Why are people so keen to order this card? It is worth mentioning that everything is completely free – there is no service charge and no commission. Revolut only charges Mastercard a 0.6-0.7% commission from every transaction.

Credit: Anastasia Tikhonova
Revolut CEO aims to compete with PayPal and create global money app. Credit: Darya Luganskaya

Storonsky launched Revolut in July 2015 and by February 2016 the service had over 100,000 users, mostly in the UK. Headquartered in London, the company is trying to win the hearts of British users first. For now, Revolut has 1,000 – 1,500 people joining every day, as Storonsky says.

Why are people so keen to order this card? It is worth mentioning that everything is completely free – there is no service charge and no commission. Revolut only charges Mastercard a 0.6-0.7% commission from every transaction.

Now Revolut has money to keep the service going because the company raised $4.8 million in investment. But for a long run, Revolut needs to make money. TechCrunch and other niche media expect Revolut to charge people later when they have a huge userbase. Although the company has raised $4.8 million from venture capitalists, it has to become a sustainable business. Storonsky says that he’s found a solution to keep Revolut free for users and to make money at the same time. From June, it is going to charge online retailers for transferring money through Revolut, and Storonsky believes this will bring enough revenue and keep the service running for its clients.

Startup for a trader

Storonsky was a trader for 10 years. He resigned from Credit Suisse in 2013. “I felt my career in banking had reached its peek and the banking industry was not making significant progress,” he said. The trader decided to launch his own business. He travelled a lot himself, and the idea of a multi-currency card occurred to him.

Banks and other potential partners did not believe in this idea: Storonsky received about 15 rejections before the first bank got interested in his proposal. Then it took him six month to find a factory that produces ards, sign contracts with banks and payment systems. 

Revolut wants to expand in the UK first ( a view from Revolut's office in Canary Wharf. Credit: Darya Luganksaya
Revolut wants to expand in the UK first (the view from Revolut’s office in Canary Wharf. Credit: Darya Luganksaya)

His former colleague at Credit Suisse Vlad Yatsenko helped Storonsky to implement his idea technically. The product was ready in early 2015. Banks and investors believed in Revolut when they saw the growth of the user base. Revolut did not spend on marketing relying on the word of mouth because they did not have a budget for it. Storonsky invested his own £300,000 at the first stage. However launched in July 2015, by early February 2016 Revolut attracted over 100,000 users.

Now Revolut has money to keep the service going because the company raised $4.8 million in investment. But for a long run Revolut need to make money. TechCrunch and other niche media expect Revolut to charge people later when they have a huge userbase. Although the company has raised $4.8 million from venture capitalists, it has to become a sustainable business.

Storonsky says that he’s found a solution to keep Revolut free for users and to make money at the same time. From June, it is going to charge online retailers for transferring money through Revolut, and Storonsky believes this will bring enough revenue and keep the service running for its clients.

Source: The UK Cards Association
Source: The UK Cards Association

However, some customers say that Revolut has recently started to take 3% commission from each top-up transaction in dollars. According to a Revolut user Vlad Klim, it first happened in mid-February. Another Revolut user Juri Sinode noticed that Revolut is not taking money from each card: some banks register debit cards as credit cards, and Revolut rejects them. “I have a cashback and other options on my regular bank card. But Revolut offers nothing like that,” he added. On top of that, a number of British banks offer cards with no commission on currency exchange.

 

Edited by Sara Macham