Image Is Revolut a bank?
Image Daragh Cassidy
Head Writer

The fintech has gone from strength to strength since its launch several years ago and now lays claim to over a million users in Ireland alone. But a common question that’s often asked is whether it’s a bank?

Revolut is one of the most popular apps in Ireland and has truly shaken up the financial sector since it launched in 2015. 

It charges users no day-to-day transaction fees, no foreign exchange fees on purchases up to €1,000 a month, detailed, up-to-the-minute analytics and push notifications on your spending, a host of great security features, disposable virtual cards, access to Google and Apple Pay, and a rewards scheme to name but a few great benefits.

It’s no surprise then that the fintech has well over a million users in Ireland now. 

However a question that’s often asked is whether Revolut is actually a bank?

And the short answer is no. At least not in Ireland.

So what is it?

What is Revolut?

Revolut is referred to as many different things: a fintech, an app, an online-only ‘bank’, and a challenger ‘bank’ to name a few.

However, in Ireland, it’s technically an e-money institution (EMI) and operates here under an e-money licence that it has passported over to Ireland from its Lithuanian business. 

However it still offers many of the services that one might expect from a normal bank such as a current account, debit card, and direct debits. 

However, as it isn’t a bank, it cannot lend money - so no overdraft facility or personal loans are available. It's also ultimately overseen and regulated by the Lithuanian Central Bank as opposed to the European Central Bank.

As an e-money business it also differs from banks in another key way - the protection of your money. 

Deposit Guarantee Scheme

The Deposit Guarantee Scheme (DGS) protects depositors in the event of a bank, building society or credit union authorised by the Central Bank of Ireland being unable to repay deposits. The DGS is administered by the Central Bank of Ireland and is funded by the credit institutions covered by the scheme.

The scheme covers deposits of up to €100,000 per institution in things such as current accounts, saving accounts, demand deposit accounts, notice deposit accounts, fixed-term deposit accounts and share accounts in a building society or credit union.

As Revolut isn’t a bank it doesn’t cover your savings in this way.

Rather, EMIs are subject to what’s called 'safeguarding' requirements.

Under this rule, an EMI such as Revolut is required to safeguard the money it receives from customers into a separate, segregated client money bank account. The money in these client accounts is then held by Revolut on customers’ behalf. These client money accounts must also meet regulators' requirements.

In the case of Irish customers, the main client money bank account is JP Morgan (before Brexit it was Lloyds in the UK) and Revolut, in theory, should have no access to this money. 

If Revolut were to become insolvent, customers would be able to claim this money back from JP Morgan or any other approved institution where Revolut may have put your money.

According to EU rules, depositors must get their funds back in priority to all other creditors. So Revolut users can take comfort from this.

However the issue could arise where Revolut fails to "safeguard" or segregate all of its depositors’ money or where the costs of winding up the fintech, in the unlikely event of it going bust, outweigh the funds available. So there is a small risk here with Revolut in comparison to a bank.

Banks versus EMIs

Bank

EMIs

Licence 

European Central Bank 

Nationally: Central Bank of Ireland 

Credit services 

Yes

No

Customer security 

DGS - up to €100,000 per institution 

Safeguarding 

Minimum capital requirements

Large

Small

Will Revolut ever become a bank?

Revolut actually already has a banking licence in Lithuania meaning it can offer customers in the country loans if it wants to. It also means its Lithuanian customers are covered by Lithuania's version of the Deposit Guarantee Scheme.

Revolut could have used that same banking licence to operate in Ireland by passporting it over here under EU rules. However it has chosen not to do so. It has passported over the e-money licence instead. 

It is currently in the process of applying for a separate e-money licence from the Central Bank of Ireland though.

More on Revolut

For further information on Revolut and to learn more about the fintech, take a look at the following:

Get in touch

If you have any questions about current accounts or Revolut, we’d be happy to help answer them. Comment below or contact us on Facebook, Twitter and Instagram.