Our evaluation(3.9/5)
Monzo is a popular online bank offering business accounts for the UK.
Features
  • Company: Monzo Bank Limited

  • Type of account: Bank current account for business

  • Intended for: Limited companies and sole traders

  • Overdrafts: Available

  • Loans: Only through third party lender

  • Monthly fee: £0-£5

  • Debit card: Included (Debit Mastercard)

  • Credit card: Not available

  • IBAN: Not included

Follow the link below and click to get a business account. You need to download the Monzo app on your phone to start the sign-up steps.

Monzo was one of the first online banks based in the UK. There are no physical bank branches as everything is managed online through a mobile app.

Monzo offers Personal and Business current accounts, both operating in GBP currency. There are two tiers of Business accounts:

  • Lite: £0/month

  • Pro: £5/month

They are for companies and sole traders alike, the only difference being the features included on the plans (Pro is more geared towards limited companies). In any case, you get a Debit Mastercard.

A Personal account must be created before a Monzo Business account, so you actually end up having both.

Monzo is a full-fledged bank authorised by the Prudential Regulation Authority (PRA) that also regulates it alongside Financial Conduct Authority (FCA). Up to £85,000 is protected by the FSCS (if eligible) – similar to high street banks.

Who can open a Monzo Business account?

To open a Monzo Business account, you need to be a limited company (Ltd) or sole trader based, registered and a tax resident in the UK. If you pay taxes in another country, you cannot have a Monzo account.

Limited companies should also have an active status on Companies House, active company director, at least one person of significant control listed on Companies House, and have no corporate directors or corporate persons of significant control. Most of your money should be made from selling goods or providing services rather than from investment income or interest.

Monzo does not accept partnerships incl. limited liability partnerships (LLP), limited companies by guarantee, public limited companies (PLC), charities, community interest companies (CIC), trusts or funds, clubs or other non-registered organisations, or other registered business types such as unlimited companies (Unltd), industrial and provident societies (IPS) and royal charters (RC).

There’s a whole list of industries not accepted by Monzo as they are considered high risk, such as legally dubious/illegal trades, sales of precious jewellery and financial services.

Costs and fees

It’s free to open an account with Monzo and there’s no minimum contract.

There are two Business accounts: Lite with no monthly fees and Pro for £5 per month. You can switch between them any time, so neither choice is set in stone. However, the Pro subscription fees already charged would be non-refundable if switching from that to the free plan.

Business account Charges
Account creation Free
Monthly fee Lite plan: £0
Pro plan: £5
Card payments in GBP (anywhere) Free
Card payments in other currency (anywhere) Uses Mastercard’s wholesale rate with nothing added on top
Bank transfers (UK) Free
ATM withdrawals (UK) Free
ATM withdrawals (abroad) First £200 during 30-day period is free, above costs 3% of withdrawal amount
Cash deposits £1 each
Cheque deposits Free (via Freepost)
Business
account
Charges
Account creation Free
Monthly fee Lite plan: £0
Pro plan: £5
Card payments in GBP (anywhere) Free
Card payments in other currency (anywhere) Uses Mastercard’s wholesale rate with nothing added on top
Bank transfers (UK) Free
ATM withdrawals (UK) Free
ATM withdrawals (abroad) First £200 during 30-day period is free, above costs 3% of withdrawal amount
Cash deposits £1 each
Cheque deposits Free (via Freepost)

Apart from the monthly Pro fee, there aren’t actually that many fees to speak of, because Monzo doesn’t deal with international transfers, interest rates, overdrafts or loans for business users.

UK bank transfers are free to process, debit card payments anywhere in the world incur no fees and cashpoint withdrawals are free in the UK. Abroad, the first £200 taken out from an ATM during a 30-day period is free; above that, it costs 3% of the withdrawal amount.

Cash deposits are £1 each, deducted from the cash you hand in at the PayPoint. Cheques are free to process, provided they are sent by Freepost.

International payments partially there

Monzo focuses primarily on domestic business, meaning that current accounts come with a bank account number and sort code, but no IBAN for international transfers. That’s because the system is not yet connected to the SEPA and SWIFT networks, though Monzo has stated for a couple of years they are “working on” this. We noticed the business account does come with a BIC number, though. There is no option to store any other currency than British pounds.

Monzo does, however, recommend a couple of workaround solutions for receiving international payments:

  • Generation of IBAN: Use an IBAN generator to create an IBAN to provide to the sender. This method is not reliable – it may take several days for money to arrive, if at all it arrives in your Monzo account!

  • Use TransferWise: Connect with TransferWise from the Monzo app to make and receive international transfers through TransferWise.

The first option is only for receiving international payments, which wouldn’t directly incur you any fees (these are paid by the sender, or deducted by interbanks during the transfer). We do not recommend generating IBANs even if Monzo says you can do it, as there will be no guarantee of transfer success.

TransferWise can be used for sending and receiving transfers internationally. We much prefer this method, as TransferWise is a reliable platform that handles currency exchanges and payments reliably for low fees. It is also the most convenient method, as TransferWise is integrated in the Monzo app in the bank transfer section.

Monzo international payment in app

International transfer in app.

Send to almost any currency.

View conversion fee in app.

Just pick the option for international payments and fill in the details for the transfer, including the recipient’s currency or country. You will be shown the transfer fee upfront during this process (e.g. it was only £0.63 for sending £100 to euros when we tested it on 26 May 2020), as well as the amount the recipient will receive after the currency exchange rate and fees are factored in.

The only reliable way to receive international payments is by getting the payer to send it to your TransferWise account, where you can convert the currency to GBP, then send it to your Monzo account via a domestic bank transfer.

The Business Debit Mastercard can be used abroad in any foreign currency. Monzo uses the Mastercard wholesale rate with no markup on the exchange rate, which gives you the best possible rate.

Card, cash and cheques

With every Monzo Business account comes a Debit Mastercard with chip, contactless and swipe facility (Monzo does not offer credit cards). You can add this to the Apple Pay or Google Pay wallet. It has the card number, expiry date and cardholder name embossed just like debit cards from the high street banks, which cannot be said of the cards that most online banks have.

Photo: Monzo

The business debit card comes in two shades: light grey for Lite users or dark grey for Pro users.

The card can be used anywhere Mastercard is accepted, but the website states there are “occasional issues” using it in certain countries including Bulgaria, Portugal and Cuba. Monzo also writes that merchants not keeping their systems up to date can lead to situations where the card is not recognised.

You can withdraw cash for free at any ATM accepting Mastercard, but as with any bank, there are cash withdrawal limits:

  • Daily: £400
  • Over 30 days: £5,500
  • Fee-free outside EEA over 30 days: £200

What about cash deposits? At any PayPoint in the UK, you can deposit between £5 and £300 in one go for £1. Just give the PayPoint assistant your Monzo card and the cash, and they will process the card and hand you a receipt when done. Cash deposits take up to 10 minutes to appear in your bank account.

You can deposit max. £1,000 in cash every six months, which is really not much, so cash-heavy businesses such as retail shops should probably not go for Monzo.

Cheques can be deposited via Freepost for free, but some merchants feel better using tracked postage instead which would cost money. We’ve seen some merchants complaining that their cheques were taking a long time to show in their Monzo account, so the paid method may be wise for reassurance. Note that Monzo does say it takes 2-3 weeks for cheques to clear in your account.

No credit card or overdraft, but third-party loan possible

Monzo does not offer credit cards, but they do have options for a business loan through the third-party lending partner Funding Xchange. Only eligible limited companies can apply for this, and the costs are determined by the lender.

With Monzo, you cannot apply for the Bounce Back Loan Scheme (BBLS) intended for companies struggling due to coronavirus.

The Personal Monzo account has an overdraft option, but Business accounts do not. Since you have to create a Personal account before adding the latter, you could use the Personal overdraft (limit determined by your credit history) for personal use, not for business purposes.

Monzo app

As an online-only bank, it’s important the Monzo app gives the smooth experience expected from a serious bank. After testing it, we think it is generally good and user-friendly.

The app can be downloaded in the App Store on iPhone or Google Play on Android devices.