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.

Alternatively, you can log into your account in an internet browser, but Monzo does not recommend this unless you’ve lost your phone or for emergency reasons, since the web account doesn’t have all the features of the mobile app.

You can switch between personal and business accounts in the app. There are slightly different features for the accounts, e.g. options for an overdraft and joint account on Personal. All Business account holders can:

  • Payments: Transfer money to other bank accounts, connect with friends using Monzo, set up standing orders or Direct Debits, send money internationally (powered by TransferWise).

Image: Monzo

Monzo budget functions

Track your budget through notifications and an ongoing overview.

  • Saving pots: Save money into “pots” labelled with your goal – e.g. new computer, expenses, travel – and move money from your current account into these. The money will then be reserved, i.e. not part of the main account balance, until you move it back to the main account.

  • Budgeting: Add spending limits for different categories – like bills, entertainment, taxes – that can be set for specific time periods. Track how you’re doing from the app.

  • Manage cards: Freeze and “defrost” the debit card, order a new card, view PINs, block gambling transactions, de-/reactivate magstripe functionality, add card to mobile wallet.

  • Get information: Check account limits and allowances, fee and bank statements (can be exported to external file), account details, and search the help section for questions about Monzo.

We particularly like the saving pots to help you manage money. Apart from setting a goal amount for each pot, you can lock it until a certain date (though it is possible to unlock it, should you need the money prior to that).

The money set aside in the pots is not spent when using the debit card or current account for payments, so it is truly kept separate until you manually transfer the money back to the main account. You can also schedule ingoing and outgoing transfers from the pots to your main account instead of manually moving between them.

Image: Monzo

Monzo multi-user accounts

On Pro, multiple users can manage the business account.

Furthermore, the budgeting section is an excellent way to see whether you’ve spent too much on certain things. If you’ve gone overboard in an area, the visual representation will make that clear. The budget is repeated every month (unless you edit it every time period) and you can set the date it resets.

On the Pro plan, limited companies are allowed to have more than one user managing the Monzo Business account. Just beware that all users have full access to all features, as there are no options to limit permissions.

Pro users can create a special Tax Pot that automatically deducts a percentage of your income so you don’t have to work this out manually.

You can also send and track electronic invoices on the Pro plan. That’s more or less it for additional features on the Pro plan!

Accounting integrations

The Free Business account does not let you integrate with any external apps. But if you upgrade to Business Pro, you can sync account activities with the external accounting solutions FreeAgent, QuickBooks or Xero. Monzo Pro users get the first 6 months of a Xero subscription free, provided they are a new Xero user.

Apart from these bookkeeping integrations, you can get special deals from Square if you sign up via the Monzo app. The expense management system Expensify also offers a deal for Monzo users, but you have to sign up on their website to get an offer. Flux can also be connected with the app to automatically upload digital receipts for eligible transactions.

Photo: Monzo

Monzo Business online banking

Monzo is managed primarily through an app, but it is possible to log in on a computer too.

Customer service and Monzo reviews

Monzo offers 24/7 customer support to all business account holders via in-app messaging, email and over the phone. Emailing gives the slowest replies, so we recommend chatting to support in the app or calling them.

A Monzo community forum is also available, though Monzo seems to have stopped answering queries here. But you can find peers’ answers for common queries particularly for the things people are really frustrated with, or at least get a good impression of where Monzo is lacking at the moment.

Many have complained about frozen accounts without explanation, followed by significant delays of retrieving the money stuck in it

On desktop, the help section/FAQ on the website does not have a search button to quickly find specific answers, which can be really frustrating as it means you have to sift through different sections to find a particular question.

In the app, however, there’s a search field for queries, so it is much faster to use this.

Customer reviews on TrustPilot are very good on average, so it appears most people have no issues with Monzo. But there is a suspicious amount of overly positive reviews, which usually means the company incentivises these (i.e. they’re not true).

If you look at the bad reviews, you see many have complained about frozen accounts without explanation, followed by significant delays of retrieving the money stuck in it. This has been confirmed by Watchdog who reported the number of frozen Monzo accounts has been greater than any other banks in the past year. This could be due to the high growth of the company and the inability for Monzo to catch up with their compliance procedures.

In line with that, many report poor customer service experiences in general. Recently, business users in the community forum are unhappy about the lack of access to the government-funded Bounce Back Loan Scheme.

Switch between Business and Personal accounts.

Monzo business savings pot

Saving pots are separate from main account.

Manage pots and accounts in the app.

Signing up

Creating a Monzo account is done almost entirely through the mobile app. You go to the App Store (on iPhone) or Google Play (on an Android phone) and download the app, then start the sign-up by submitting your email address. A verification email is sent to you where you need to click a link to continue answering questions about your personal and financial details.

At some point, you verify your mobile number through an SMS code, accept terms and conditions, take a photo of a valid photo ID and record a short video of yourself talking to your phone camera. This is a normal step for online banks to verify your identity. A ‘soft search’ check will be performed on your credit file during sign-up, which won’t affect chances of getting credit elsewhere.

After submitting everything, it usually takes between 5 and 60 minutes for Monzo to accept your application (it took a few minutes for us). After the approval, you can order the debit card for the personal current account that was just created. You don’t have the option to only create a Business account, so first, you are actually completing the sign-up for a personal Monzo account. Afterwards, you can add a Business account from the app menu.

If you want to switch entirely from a previous bank account to Monzo, the Current Account Switch Service in the app lets you do that in a few taps. This will close your old bank account, move all its money to Monzo and redirect any future payments to Monzo.

Our verdict

Monzo is undoubtedly one of the better challenger banks in the UK, but it lacks important things on the business side. A Personal Monzo account offers more features like an adjustable overdraft, joint account and the ability to earn interest in a savings pot.

For an online bank that’s been around for years, you still get the sense it’s a start-up company that’s stalled on certain feature improvements while prioritising personal accounts more.

The Business account is very useful for managing budgets, savings and payments, but sole traders and businesses with foreign clients have to use workarounds to receive and send cross-border transfers.

The lack of overdrafts and Monzo- or government-backed loans for business accounts could also pose issues for businesses expecting a full package from a real bank.

The fast sign-up and lack of monthly fees (for the Lite account) are attractive considering the value of getting a real business bank account compared to an e-money account often associated with an app-based business account. The Pro account benefits from invoicing, accounting integration and multi-user access for a company team, but not much more than that.

In the end, Monzo’s business offering feels incomplete without lending options and a connection with SWIFT and SEPA. For an online bank that’s been around for years, you still get the sense that it is a start-up company that’s stalled on certain feature improvements while prioritising personal accounts more. This doesn’t mean it’s not a good option – you just need to be aware of the shortcomings.

Pros

  • Fast sign-up, no monthly fee (on Free)

  • Fully licensed and regulated bank

  • Debit card included

  • Handy budgeting features

  • Money ‘pots’ make saving for different purposes easy

  • 24/7 support available

Cons

  • No credit card or business overdraft

  • Business loans only via third party

  • Low cash deposit limit

  • Slow to develop features

  • No SWIFT or SEPA transfers unless using TransferWise

  • More complaints of frozen accounts than for other banks

Name of Reviewed Item: Monzo Business account Rating Value: 4 Image: https://www.mobiletransaction.org/wp-content/uploads/2020/05/monzo-business-account-review-uk.jpg Review Author:Review Date: