If you’ve ever wondered How does Monzo make money?, you’re not alone. Monzo, the popular app-based bank, seems to offer so many features like fee-free card payments free ATM withdrawals and even a free basic account without the usual charges you’d expect from traditional banks. So, how does it stay profitable.
The answer is simple: Monzo has found smart and innovative ways to earn money that don’t rely on the old-fashioned fees banks charge their customers.
From interchange fees to business accounts, loans and even energy switching, Monzo generates revenue by offering useful services that make life easier for users. And the best part? They manage to do it all while keeping things affordable and transparent for their customers.
How Monzo Works: A Modern Bank for the Digital Age
Monzo isn’t your typical bank. In fact, it’s not really a bank in the traditional sense at all—it’s more of a banking app that gives you full control of your finances right from your phone.
Unlike traditional banks that have physical branches, Monzo operates entirely online, which means you can manage your account anytime, anywhere.
Setting up a Monzo account is simple and free. You can open one in just a few minutes on your phone, with no need for a branch visit. Plus, Monzo makes banking feel less like a chore.
Need to check your balance, pay a bill, or split a dinner bill with friends? You can do it all without ever leaving the app. That’s one of the reasons Monzo number of customers has been growing so fast—over 7 million users trust Monzo to manage their money!
While Monzo doesn’t charge the typical fees that old-school banks do, it still manages to make money. But how? Well, Monzo earns through things like interchange fees that’s when you swipe your Monzo card at a store.
Every time you use your card, Monzo gets a small cut from the business where you made your purchase. This is a major way how Monzo makes money.
A Brief History of Monzo
Monzo didn’t just pop up out of nowhere. It started as a small idea with big dreams of changing the way we think about banking.
Founded in 2015 by Tom Blomfield and his team, Monzo began as a mobile-first bank, meaning it was designed from the ground up to be used on smartphones, not in physical branches. The goal was simple: make banking easier, more transparent, and more user-friendly.
In just a few years, Monzo went from a small project to one of the most popular digital banks in the UK. With millions of users, Monzo valuation skyrocketed, drawing attention from investors and financial experts alike. This rapid growth raised some big questions—like how does Monzo make money if it’s not charging the typical bank fees?
In 2019, Monzo made headlines again when it raised a large amount of funding, boosting its growth and expanding its customer base. This helped the bank reach new heights, with Monzo number of customers now growing by thousands every month.
What’s interesting is how Monzo’s ownership has evolved over time. While it started as a small startup, it has attracted big-name investors, with Tom Blomfield net worth growing as Monzo value increased.
The ownership structure also shows that Monzo is moving away from its roots as a small venture and becoming a major player in the banking world.
How Monzo Makes Money: The Core Revenue Streams
You might be wondering, How does Monzo make money if it’s not charging the usual fees like other banks. The truth is, Monzo has gotten creative with how it generates revenue. Instead of relying on monthly account fees or penalty charges, it makes money through several clever and modern strategies. Let’s break down the key ways Monzo earns its revenue.
Interchange Fees: The Power of Your Card Swipe
Every time you use your Monzo card, the company makes a small percentage from the store where you shop. This is known as interchange fees and it’s one of Monzo’s biggest revenue streams.
So, every time you tap your card at a café, restaurant, or online store, Monzo gets a tiny cut. While it may seem small, it adds up quickly when millions of customers are using Monzo every day.
Business Accounts: Helping Entrepreneurs Thrive
Monzo doesn’t just cater to personal banking business accounts are a big part of their revenue too. They offer small businesses a simple way to manage their money, and in return, Monzo earns through monthly fees for premium business services.
This has become an important revenue stream as more entrepreneurs look for easier ways to handle their finances.
Overdrafts: A Smart Way to Borrow
Monzo also generates money through overdrafts. If a customer spends more money than they have in their account, Monzo offers them an overdraft, but it comes at a cost.
While Monzo offers a fee-free overdraft up to a certain limit, anything beyond that may come with charges. This borrowing feature is not only helpful to customers who need a little extra cash but also helps Monzo boost its earnings.
Loans: Lending Made Simple
For those looking to borrow larger sums of money, Monzo offers personal loans. While Monzo doesn’t make money from the loan itself, they charge interest, which is how they generate revenue.
Their loans are attractive because they come with transparent terms and no hidden fees, something Monzo users have come to appreciate.
Savings & Interest: Making Money from Your Money
Monzo has also tapped into the savings market by offering interest on cash in savings accounts. They partner with other financial institutions to offer savings accounts that generate interest for you. Monzo takes a small cut of the interest, making it a win-win situation for both customers and the bank.
Monzo Diverse Business Model: Key Revenue Sources
Monzo’s success isn’t just about one or two revenue streams. It’s the diversified business model that keeps it profitable and growing in the competitive world of digital banking. Let’s take a deeper look at some of the additional ways Monzo makes money and how it sets itself apart from traditional banks.
The Monzo IPO: A Major Milestone
One of the biggest questions around Monzo is whether it will ever go public. The Monzo IPO (Initial Public Offering) has been talked about for years as the company’s growth and valuation have skyrocketed.
If Monzo decides to go public, it could be a huge opportunity to raise even more money, giving it the ability to expand its services further. With Monzo valuation currently reaching billions, an IPO could attract even more investors and raise the brand’s profile internationally.
Monzo Valuation: What Is Monzo Worth Today?
As of now, Monzo valuation has been steadily climbing. The company has raised millions in funding from investors, pushing it to a valuation of over £1 billion. This impressive figure reflects how much trust investors have in Monzo’s business model and future growth.
It also shows that Monzo’s ability to generate revenue without charging traditional fees is something that’s really working. For those wondering about Monzo’s future, a high valuation signals that they are on the right track.
How Much Money to Open Monzo Account?
Unlike most traditional banks, how much money to open monzo account isn’t something you need to worry about. You can open an account with zero balance. That’s right—no initial deposit is required to start using Monzo, making it a perfect option for anyone looking to dip their toes into digital banking.
While premium features do come with fees, the basic Monzo account is completely free, which lowers the barrier to entry for many users.
Monzo Free Money: How It Attracts New Users
One way Monzo has gained popularity quickly is through offering Monzo free money in the form of referral bonuses. If you invite friends to join Monzo and they sign up, you both can earn rewards, which is a great incentive.
It’s a clever way to attract new customers without the need for expensive advertising. This approach has worked wonders for Monzo, helping them grow their user base rapidly.
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Monzo Around the World: A Global Banking App
While Monzo originally started in the UK, its reach is rapidly expanding. Today, people from all around the world are discovering how easy it is to manage their finances with Monzo. But there’s a key question many potential customers have: can you use Monzo outside the UK?
Using Monzo in USA: Can You Bank with Monzo in America?
One of the most common questions people ask is about using Monzo in USA. While Monzo has not yet fully launched in the United States it’s still possible for U.S. residents to use their Monzo cards while traveling abroad or for online purchases.
Monzo has made it clear that the U.S. is a potential market for future expansion so it’s likely that Monzo in USA will become a reality sooner rather than later. For now U.S. customers can take advantage of Monzo’ free money and low-fee services while traveling to the UK or Europe.
Where Is Monzo Based?
Monzo is based in the UK but it operates globally thanks to its digital only platform. Despite its headquarters in London, Monzo number of customers is growing internationally.
The company is positioning itself to become a global player in the digital banking space catering to anyone who prefers to bank with a phone rather than a physical branch.
Who Is Monzo Owned By?
As for who is Monzo owned by the company has a mix of investors and is still largely owned by its founders. Tom Blomfield one of the original founders, has seen his personal wealth grow as Monzo’s valuation increases.
It’s important to note that while Monzo remains a private company for now, it has secured funding from large institutional investors. In the future, the company could potentially go public, leading to a wider ownership base through an IPO.
Conclusion
As Monzo continues to grow and attract millions of users, the big question remains: can Monzo maintain its profitability in the future? The digital banking world is competitive, and as new players enter the market, Monzo will need to keep innovating to stay ahead.
One of the biggest factors in Monzo’s success so far is its ability to diversify its revenue streams. By offering everything from business accounts to energy switching services Monzo has created a robust model that doesn’t rely on the old-school banking fees that most people dread.
It’s clear that how Monzo makes money is designed to benefit both the company and its users. With a mix of interchange fees premium accounts and loans Monzo’s approach is both sustainable and customer-friendly.
But Monzo’s future isn’t just about how it earns money. The company will need to continue building trust, expanding its user base, and adapting to new technologies.
For instance, if Monzo decides to go ahead with an IPO, the company could open itself up to even more growth, but with that comes the pressure to deliver returns to shareholders.
FAQs
Does Monzo make a profit?
Monzo is still in its growth phase and has not yet reached consistent profitability. However, its revenue model, based on interchange fees business accounts, and other innovative services, is showing promising results.
As Monzo expands and attracts more users, it’s expected that the company will reach profitability in the near future.
How do banks like Monzo make money?
Banks like Monzo make money in a few key ways. The main revenue sources for Monzo include interchange fees (earned every time you swipe your Monzo card), premium accounts, overdrafts, loans, and commissions from services like energy switching.
Monzo doesn’t charge traditional banking fees like most banks which helps it attract and retain customers while still generating profit.
What are the downsides to Monzo?
While Monzo offers many great benefits, there are some downsides to consider. For example, if you exceed your free ATM withdrawal limit or need to use certain premium features, there may be additional fees.
Additionally, because Monzo is a digital-only bank, customers who prefer face-to-face banking might miss having physical branches to visit. It’s also worth noting that Monzo in the USA is still limited, so U.S. residents are not able to fully use all of Monzo’s features just yet.
What is the Monzo business model?
The Monzo business model revolves around providing a digital-first banking experience that focuses on transparency, low fees, and innovative services.
Instead of relying on traditional banking fees like account charges Monzo generates revenue from a variety of sources, including interchange fees, business accounts, loans, and extra features like savings accounts and energy switching.