Digital banking platforms, also known as Authorised Payment Institutions (API) or e-money institutions/issuers, generally don’t consider themselves to be banks, but they promise something different to their traditional competitors.
These platforms all offer an alternative to traditional high street accounts, they are quick to set up and operate entirely from your smartphone where you can access all their digital banking services.
According to Finder, one in ten people in the UK have switched to a digital only bank like Monzo, Revolut or Starling for their personal banking. That said, nearly half (47pc) of those who use them keep less than £1,000 in a digital bank. There is hope for these challengers – two-thirds of respondents said they plan to convert fully to a digital bank in the future.
What’s interesting is that rather than holding onto cash, people often use personal mobile banking for secondary functions like spending abroad, transferring cash and budgeting apps.
Even if you’d like to keep the bulk of your cash with one of the traditional banks, having a digital account could see you well in one of these other key business areas.
Take a look at the digital banking platforms below and see what you think.
|ANNA||Smart invoicing, automatically chase outstanding payments||Free if your monthly income is under £500
£5 a month if your monthly income is £500-£2,000
£9.90 a month if your monthly income is £2,000-£20,000
£19.90 a month if your monthly income is £20,000-£500,000
£49 a month if your monthly income is over £100,000
|Revolut||Hold, exchange and transfer currencies with real exchange rate, issue free corporate cards to employees, perks from commercial partners||Companies pay between £0 – £100 a month, depending on the account (or they can speak to Revolut and get a bespoke deal)
Freelancers pay £0 for the free account, £7 a month for the Professional account and £25 a month for the Ultimate account
|Starling Bank||No monthly fees, categorised transactions, integration with Xero, FreeAgent and Quickbooks, overdraft facility||No monthly fee
Can add a monthly £7 ‘business toolkit’ for extra functionality
|Tide||No fees on card payments in UK or abroad, Tide Mastercard, instant invoicing, integration with FreeAgent, Sage and Xero||Free (£0)
Plus Cashback (£49.99)
|Monzo||Integrations with Xero, FreeAgent and QuickBooks; set aside a percentage of your earnings to put towards tax every time you’re paid||Lite: Free
|Coconut||Can connect current accounts and credit cards from 20 different banks including Barclays, Lloyds and Starling
Export your data – sole traders can an extra help up with tax reports to help them with their self-assessment
See calculations of how much tax you’ll owe
Tips on what expenses you can claim
|Side-Hustle: £3 a month (excluding VAT)
Professional: £5 a month (excluding VAT)
|Mettle||Create and send invoices directly from your smartphone, complete with company logo
Manage recurring payments in-app, add receipts to transactions and export your expense data
Can connect with Xero, Freeagent and Quickbooks
|Free to use and free to join|
|Cashplus||Add up to 20 additional business expense cards for your employees to use
Cashplus integrates with accounting software
Get a business cash advance to help with cash flow
iDraft (see description)
|Annual fee of £69|
|Countingup||Automated bookkeeping, professional invoices and automated receipt scanning as key features along with tax calculated and filed for you
Add notes and attachments directly to your transactions
Receipt capture and tax estimate
|Starter is free for businesses with incoming funds of £0-£500 a month
Standard is free for the first six months (£4.95 a month thereafter) for funds of £500-£4,000 a month
Premium is also free for the first six months (£9.95 a month thereafter) for businesses with incoming funds of over £4,000 a month
|Fair Everywhere||Access to three currency wallets: GBP, USD, EUR
Up to 8pc cashback on any card spending with over 50 major UK high street retailers
All types of small businesses, sole traders and partnerships can apply – and they can link as many cards to the account as they like for employees
|Minimum monthly charge of £12.50 with a £55 application fee|
|CardOneMoney||Text alerts confirming when money is in and to confirm that bills have been paid
Check your balance using text messages
Up to four additional prepaid corporate MasterCards linked to your business account
Export statements to a cloud accounting network
|£12.50 a month plus a £55 application fee|
ANNA is open to any UK resident who is a director of a limited company and non-limited businesses that are structured as a partnership or sole trader.
On the app you’ve got smart invoicing, creating sales and purchase invoices for you in under ten minutes. It’ll politely chase outstanding payments that you’re owed and you’ll be notified about VAT, corporation tax and self-assessment tax return deadlines. In the future it’ll provide payroll services.
ANNA is free if your monthly income is under £500; £5 a month if it’s £500-£2,000; £9.90 a month if it’s £2,000-£20,000 and £19.90 a month if it’s £20,000-£500,000.
Revolut is a good shout for businesses who travel and trade overseas. Customers can hold, exchange and transfer in over 28 currencies with the real exchange rate.
You can issue physical and virtual cards and track your employees spending in real time.
Revolut comes with perks and benefits from partners such as Apple, Google Ads, Deliveroo and Samsung.
In terms of accounts you’ve got:
- Free (£0 a month)
- Grow (£25 a month)
- Scale (£100 a month)
- Enterprise (bespoke – speak to Revolut)
Freelancers can choose from the free account (£0 a month), Professional (£7 a month) and Ultimate (£25 a month).
The Starling Bank business account is open to you if you’re self-employed or the owner of a limited company or if you’re part of a limited company with multiple owners. You must have been trading for a minimum of 18 months to apply. Note that sole traders must have a Starling Bank personal account to open a Sole Trader account.
There’s no monthly charge on the account and it comes with an overdraft. If you’re running a limited company, you can apply for an overdraft up to £150,000. To boost your business’ functionality, you can add on a toolkit for £7 a month. Extra tools include invoices and auto-matching, email integrations and VAT recorded on transactions.
If you want to deposit up to £20,000 cash, you can do so at Post Office branches across the country. It’ll set you back £3 per deposit.
What’s more, you can integrate it with Xero, FreeAgent and Quickbooks.
With Tide there are no fees on card payments in the UK or abroad and you get free transfers between Tide accounts. ATM cash withdrawals are £1.
Order up to 35 Team Cards and keep track of who’s spending what. Set up sub-accounts to ringfence money for expenses.
You’ve also got invoicing and the ability to set up scheduled payments. The package is rounded off with in-app support as well as integration Xero and QuickBooks.
There are three accounts available through Tide: Free (£0), Plus (£9.99) and Plus Cashback (£49.99)
Monzo is the latest of the digital banking platforms to introduce business banking. Open an account if you’re a sole trader or the director of a registered limited company by shares (Ltd). Multi-user access is available for limited companies. Just be aware that you need to have a personal account with Monzo before you can apply for a business account.
Accounts aren’t available to the some types of businesses but this may be reviewed in future.
To limit financial crime, you can pay in £5-£300 of cash in one go, and up to £1,000 every six months. If you’re aged 16 or 17, that limit is lower, so you can pay in up to £500 every six months.
As for features, Monzo integrates with Xero, FreeAgent and QuickBooks. With Monzo Business Pro, new Xero users can get six months of the cloud accounting platform free on the Business Pro account. It also has a Tax Pots feature, where you can set aside a percentage of your earnings to put towards tax every time you’re paid. What’s more, you can opt to be notified every time you get paid.
The pricing is on two tiers: Lite offers up the basics but for additional features like integrated accounting and Tax Pots you’ll need to go Pro at £5 a month.
Monese says that it isn’t a bank, instead specialising in multi-currency accounts. It gives you unlimited transactions, fast bank transfers and the ability to get cash out at ATMs globally.
Open an account from your smartphone; Monese ensures you’ll have full access within ‘a matter of hours’.
The app is supported in 14 languages and you can have accounts in both GBP and Euro for international banking. To make running your business that bit easier, you can do unlimited transactions too.
Convert currency at competitive rates in multiple currencies including US Dollar, Australian Dollar, Euro and Danish Krone.
To keep your money safe, the app uses biometric unlock and backend encryption.
The Monese business account is £9.95 a month.
For sole traders and limited companies (with up to two directors), Coconut has the functionality to handle banking, bookkeeping, invoicing and tax.
You can connect current accounts and credit cards from 20 different banks including Barclays, Lloyds and Starling. Notifications will let you know that a payment has been made or received, automatically categorising it.
Sole traders can an extra help up with tax reports to help them with their self-assessment. Of course, it has Making Tax Digital-compliant software.
See calculations of how much tax you’ll owe and tips on what expenses you can claim, maximising your tax savings.
The Side-Hustle plan is £3 a month (excluding VAT). It comes with free UK current account, ten free bank transfers a month, a tax estimate for sole traders, three invoices a month and 3pc on foreign currency exchange.
The Professional plan is £5 a month (excluding VAT) and has everything in the Side-Hustle package as well as unlimited invoices, 50 free bank transfers a month and free replacement cards.
Mettle is part of NatWest but is an independent arm. This means that you can’t ring NatWest and expect them to assist with your Mettle account.
You’ll be eligible if you’re a sole trader or a limited company with up to two owners, though you must have a balance of less than £100k (or £50k for sole traders) to apply.
One of the main highlights is that you can create and send invoices directly from your smartphone, complete with company logo. Like Coconut, notifications will let you know when you’ve been paid. However, you’ll need to match the payment to the outstanding invoice yourself.
Again, it goes half-way there in terms of chasing overdue invoices. It’ll remind you that an invoice is overdue, but you’ll have to send the client a follow-up yourself.
Transactions-wise, you can manage recurring payments in-app, add receipts to transactions and export your expense data.
Other than that, you can sync your account with FreeAgent, Xero or QuickBooks but you can also export to CSV which is compatible with other accounting software.
A key consideration you must make is that the app isn’t covered by the Financial Services Compensation Scheme (FSCS). However, the account is covered under the FCA safeguarding requirements and the corresponding regulations. The purpose of safeguarding is to protect and return customer money if the company fails.
Mettle is free to use and free to join.
Cashplus says that it takes as little as four minutes to apply and only seconds to open an account.
It’s a good account if you already have a few members of staff on your payroll – add up to 20 additional business expense cards for your employees to use.
Get a business cash advance to help with cash flow and integrate it with online accounting software.
Cashplus gives you a specialist iDraft facility. iDraft is a low-cost credit limit that’s attached to your account in case you run out of cash. Use is covered by your annual fee but there is a flat daily usage charge too.
The annual fee for the account is £69.
Countingup is a relatively new player in the mobile banking market.
Its business offering comes with automated bookkeeping, professional invoices and automated receipt scanning as key features along with and tax calculated and filed for you.
Add notes and attachments directly to your transactions or you can remind yourself to claim tax relief on the purchase.
This is best if your business is UK-based as you can’t make or receive international payments with this account. Countingup hopes to include this feature in the future.
All accounting features appear in all of the accounts; these include receipt capture and tax estimate.
The Starter package is free for businesses with incoming funds of £0-£500 a month.
Standard is free for the first six months (£4.95 a month thereafter) for funds of £500-£4,000 a month.
Premium is also free for the first six months (£9.95 a month thereafter) for businesses with incoming funds of over £4,000 a month. A three-month free trial is available.
From currency exchange bods, FairFX, Fair Everywhere lets you send and receive payments all over the world.
Get access to three currency wallets: GBP, USD, EUR, with a currency conversion fee of 2.5pc.
It’s a fine account if you’re a bigger spender. Up to 8pc cashback on any card spending with over 50 major UK high street retailers (discounts only available in-store).
All types of small businesses, sole traders and partnerships can apply – and they can link as many cards to the account as you like for employees.
There’s no doubt that this is a pricey account, though. You’ve got a minimum monthly charge of £12.50 with a £55 application fee.
CardOneMoney (formerly CardOneBanking) is more old school. It uses text alerts to confirm when money is in your account and to confirm that bills have been paid. Use text messages to check your balance too.
The account is aimed at sole traders, limited companies or partnerships who have a turnover of up to £2m.
Add up to four additional prepaid corporate MasterCards which will link to your business account. You can also export statements to a cloud accounting network.
Just be aware that this one isn’t covered by the Financial Services Compensation Scheme either.
It’s £12.50 a month with a £55 application fee.
Of course, the right bank account will depend on the needs of your small business. Factor in how many employees you have, your turnover and what features will support you in the day-to-day running of the firm. Whether you choose one as your primary account or a secondary account, digital banking platforms offer up a quick and convenient alternative to contend with your high street bank.