In the recent uncertainty surrounding a potential no-deal Brexit, several traditional (or ‘legacy’) banks have floated the option of closing up to thousands of accounts abroad. This puts UK expats in an awkward position but means the time could well be ripe to switch to an alternative service, namely so-called ‘challenger’ banks.
These challenger banks are commonly used by digital nomads and expats because of how easy it is to sign up.
Two of the most popular challenger banks are Revolut and N26. To help you decide which is best for your specific needs, here is a breakdown comparison of the services offered by each.
N26 is a German-based online bank with its headquarters in Berlin. It was established in 2013 by Valentin Stalf and Maximilian Tyenthal and launched its first products in 2015. This included free N26 bank accounts and N26 Mastercards. It now offers services in 23 EU countries and the US, a smaller range than Revolut, which covers the EEA, Switzerland, Australia, and recently the US as well.
Originally called Number 26, it rebranded to N26 in 2016, when it also won a banking license, becoming one of the first official online banks. In 2018 it expanded to the UK but has closed UK operations this year, citing Brexit as the key cause. This is liable to cause problems for UK expats living abroad, who could be faced with a block transferring money from N26 online accounts to accounts with UK firms.
Revolut could face similar challenges. It has been in operation two years fewer than N26, starting in 2015, in London. Created by Nik Storonsky and Vlad Yatsenko, despite it being the younger of the two firms, it has a much larger customer base. As of August 2020, Revolut had 10 million registered users, compared with only 5.5 million for N26. Whilst not necessarily a reflection on the quality of service, it might be a comfort for some users to go with the larger company.
Whilst it is also the fastest growing online banking service, Revolut is not yet an official bank like N26 is. It operates off a Lithuanian banking license it won at the end of 2018, but it does not store clients’ money itself, relying instead on Barclays and Lloyds to perform that service. Both of these UK banks, alongside the private bank Coutts, are closing accounts in many EU countries, including the Netherlands, Slovakia, Germany, Ireland, and Portugal. This has the potential to cut down on the number of countries Revolut can offer its services in unless it can find a way to hold its own money. Otherwise, expats in those countries could find there is little difference between a Revolut account and one with a UK legacy bank.
Which Offers The Better Free Plan?
The N26 basic plan and Revolut standard both require no monthly fees to keep your account. However, the purchase of a Revolut card will cost €5.50 (£4.99), whereas an N26 card on standard delivery will be free. Standard delivery for both cards takes around the same amount of time, 10 days for N26 and nine days for Revolut. Express delivery depends largely on the country you live in and is €22.00 for N26, and €19.99 for Revolut. However, since it is possible to get a free Revolut card if you sign up through Monito, the delivery costs are pretty much tied.
Putting aside the cost of starting a standard account, making an ATM withdrawal outside the euro adds a fixed 1.70% fee from N26. In contrast, Revolut offers the service free up to the first €200 per month, incurring a 2% withdrawal fee after that. The result is that Revolut gives a better deal on withdrawals of up to €1,333 per month and N26 is a better option for withdrawals over that.
In terms of transferring your money between accounts across borders, N26 uses TransferWise, which is regularly rated one of the best providers of international money transfer services. Revolut offers a more complicated service that relies on currency, the volume you trade, and whether or not the transfer takes place during market hours. You will also need to pay an extra €6 (£5) if you want the money to arrive faster than the standard 3-5 day period. So if you are more experienced in dealing with finances, Revolut could be a good option, but for many people, N26’s simplicity when it comes to international transfers will be preferable.
Then there is the matter of deposit security. Because N26 operates under the German Financial Regulatory Authority, it is included in the German deposit protection scheme. It can therefore insure all deposits up to €100,000 held in EU member countries, which is about the same as the £85,000 insurance offered by most British banks. In contrast, Revolut is not an official bank so as yet offers no deposit protection scheme. This could be a major turn-off to potential users.
Additional And Premium Plans
N26 offers an upgraded N26 You account, which costs €9.90 (£4.90) a month. The main draws for an upgrade here are that the free euro withdrawals are extended to all ATM withdrawals worldwide, as well as adding on an Allianz insurance package.
For a further increase to €16.90 (£14.90) per month, you get the N26 Metal which offers additional customer support, discounted access to some airport lounges, travel and purchase insurance and exclusive partner offers.
Revolut similarly offers two further account tiers. Revolut Premium is the middle tier account, at €7.99 (£6.99) per month for additional medical and travel insurance, virtual cards, access to cryptocurrency as a more secure means of making transfers and payments, no fees for currency exchange no matter the amount, as well as free card delivery. It also doubles the monthly ATM withdrawal limit before withdrawal fees to €400.
The Revolut Metal account costs €13.99 (£12.99) a month and also offers free card delivery. This triples the standard ATM monthly withdrawal limit to €600, offers a 0.1% cashback plan on card payments in Europe and a 1% cashback plan outside Europe, as well as exclusive lounge pass access.
Overall, whether or not a prospective customer would choose the additional or premium accounts will depend largely on how frequently you travel. For expats who regularly move between countries to visit family, on business, or if you own multiple homes in different countries, the mid-tier range for both Revolut and N26 can provide a little extra insurance. This is also the case if you regularly make payments across borders to, for example, support family members in other countries. Of the two, Revolut’s mid-tier accounts are probably going to provide a wider range of useful services, and the inclusion of cryptocurrency holdings in the package as well as extending the monthly withdrawal limit will be large incentives.
When it comes to the Metal accounts, unless you are particularly drawn to N26’s exclusive partner offers, Revolut could again provide the best offer. Not only is the monthly price cheaper, but it offers better access to luxury lounge spaces which will probably be the most prominent draw for a Metal account. However, this again depends on how much time you will spend at airports.
If you are an expat looking to transition to a challenger bank, which service and payment plan you choose will largely depend on your individual situation. The country you live in and how often you travel between countries will be the largest deciding factors here.
Overall, N26 is a more comprehensive option largely due to the security it can offer from being an actual bank under a German regulatory body, thus being able to give better insurance. However, this does mean that some services are only available in Germany and Austria, which is worth bearing in mind.
Revolut is still a worthwhile option, primarily for its high threshold before charging for monthly ATM withdrawals, as well as offering a broader range of benefits for its mid-tier accounts. The wider customer base and greater availability between countries will still be the more attractive option for many.
Ultimately, how useful each of these services is will depend on the precarious Brexit situation. For Revolut, relying on British banks to hold its clients’ finances, its fate is tied largely to theirs. Simultaneously, N26 is no longer operating services in the UK, meaning that for UK expats looking to transfer money home or to use their card across borders, neither of these could be viable options soon.
But for expats looking to transfer money or travel between European countries, N26 provides a slightly better service. It is currently the most complete digital banking service in Europe. With competition from other legacy and challenger banks potentially drying up in the wake of Brexit, N26 could be in the prime position to take in a new wave of customers who wish to switch out their accounts.
If you want to be able to access the UK, Revolut is clearly a better choice, but for those focused purely on the EU, N26 will offer more.
As a last note: If you are from Portugal or living in Portugal, you might find this article useful.