N26 vs Revolut: How do they compare?
Or maybe you're simply fed up with your current provider’s service and their fees and charges and are looking for something better?
In our latest episode of the bonkers.ie podcast we take an in-depth look at both Revolut and N26, the fintechs who have been dominating the banking space here for some time.
We'll cover off the basics from fees and charges to rewards and extras, as well as all the other essential things that you need to be aware of before signing up.
Here’s an outline of what was discussed in the podcast.
What is Revolut?
Digital bank Revolut has around 1.5 million customers in Ireland. Revolut’s headquarters is in the UK and it operates in Ireland under what’s called an e-money licence.
This licence is actually from its Lithuanian business, which is why all Revolut customers have a Lithuanian IBAN at the moment.
Revolut is sometimes referred to as a bank as it does a lot of things you’d expect from a bank. It feels like a normal current account, but technically it’s not a bank. The company is looking at taking out a banking licence in Ireland, which would change things.
What is N26?
N26 is a similar fintech but is technically a bank. It’s online-only and has a banking licence from the German Central Bank.
This is the main difference between the two fintechs.
How can N26 use their banking licence in Ireland?
If regulated by the Central Bank, all financial institutions in the EU can passport over that licence to another country relatively easily. That’s what N26 has done.
This also means that N26 users are covered under the Deposit Guarantee Scheme by the German Central bank. This covers deposits of up to €100,000 per institution.
How are these fintechs different from traditional banks?
N26 and Revolut are online-only. There are no physical branches and they’re cashless. You can take out cash with your card, but you can’t lodge cash or cheques.
For some, that’s not an issue and many people don’t go into banks anymore. Older people might like the personal touch of a bricks and mortar bank.
Technology is really at the heart of N26 and Revolut. They’re digitally native.
Traditional banks are behind the times with their digital technology. They have old IT systems, which can be difficult to update. Revolut and N26 have really strong IT foundations and they’re always bringing out new features, products and services.
What are Revolut and N26’s current account offerings?
We’re going to look at the basic account. Both have premium accounts, but we’re just going to focus on the free version.
With both fintechs, pretty much all of your day-to-day banking is free. There’s no charge with N26 or Revolut for direct debits, standing orders, chip and pin, contactless transactions, topping up your account, receiving money, etc.
There’s no monthly account maintenance fee either. There is a €6 charge to set up a Revolut account initially, which includes the cost of the physical card you get sent out.
With N26, it costs €10 to get a physical card sent out. It’s free if you don’t want a physical card and just pay with your phone.
Pretty much all of your day to day banking is free after this, so they’re really competitive when you compare them to other current account providers in Ireland.
When it comes to cash, they’re both a little different. With N26, you’re allowed 3 fee-free ATM withdrawals a month. After that, there’s a pretty hefty €2 charge for each withdrawal.
With Revolut, you’re allowed to withdraw €200 a month fee-free or this has to be done within 5 ATM withdrawals. Once you hit either limit, there’s a €1 charge or 2% of the amount withdrawn, whichever is higher.
Revolut and N26 want to discourage people from withdrawing cash because they get charged when customers withdraw cash from other banks’ ATMs.
Every time you take out money, the banks usually charge each other. With the main banks, it’s usually fine because they all have enough customers and machines so that they recoup the money back.
Foreign exchange fees
The lack of foreign exchange fees is one of the reasons why both of these fintechs became so popular. This is a key feature and selling point for both of them.
Foreign exchange fees add up when travelling abroad or making purchases online. With Euro, they’re not so big but if you’re going to the US or the UK, the fees can add up. Foreign exchange fees can be as high as 3% with some banks.
When you make a payment with your card with N26, you don’t get charged a foreign exchange fee. If you like travelling a lot the N26 account can be brilliant.
With Revolut there are no foreign exchange fees on card purchases up to €1,000 a month. It used to be unlimited, like N26, but now there’s a limit on it. Still €1,000 is very generous.
Withdrawing cash abroad
With N26 if you withdraw cash outside of the Eurozone, you’re just charged 1.7%. With Revolut, you can withdraw the equivalent of €200 fee-free and after that there’s a 2% fee.
Both accounts are brilliant for making payments and withdrawing cash in a non-Eurozone country.
They both have Apple pay and Google pay. These are fee-free as well as they’re considered contactless transactions.
Both N26 and Revolut can provide up-to-the-minute details on your spending. Revolut’s app in particular is a bit more fun and engaging in this way than N26’s.
Revolut has lots of graphs, charts and information to show you how and when you’re spending your money.
You can really easily toggle on and off security settings in both apps.
If you want to limit online transactions you can turn off online transactions. You can also turn off ATM withdrawals, disable contactless, etc. You can also block and unblock your card.
One key feature that Revolut has is called Vaults. It’s a really handy feature that allows you to round up any purchases you make and then deposit the remaining amount to the nearest euro to the Vault.
For example, if you buy a coffee for €2.80, it will round this up to €3.00 and put €0.20 in the Vault for you.
With N26, you can do the same with a feature called Round-Ups. These then go into the Spaces of your choice.
With N26, you have to have a paid subscription to access Round-Ups, it’s not available on the Standard account. Vaults is available for free on the Revolut app.
What is Revolut Junior?
Revolut Junior is a great feature for families, parents or guardians. There are currently over 100,000 Revolut Junior customers in Ireland.
It was launched in July last year and is an account for children aged between 7-17. It was designed by Revolut to promote financial literacy in kids from an early age.
A parent can set up an account for their child from their own Revolut app. The child will then get a card of their own and can download the Revolut app. The parent will be in complete control of the account and the security features.
When Revolut Junior launched, it had a top-up limit of €40 a month, so technically you could only give a child €10 a week in pocket money. In June however, Revolut removed this feature so it’s now limitless.
Disposable virtual cards
With Revolut the disposable card feature allows you to create a new card for a one-off payment online. Once you carry out your purchase, the card number gets destroyed.
If you’re on a website that seems a bit suspicious, you can use this card and you can be certain it won’t be linked to your original card.
However, if you need to return the purchase you made with the disposable card, it will come back to your original Revolut account.
N26 doesn’t have a feature like this at the moment.
Cryptocurrency and commodities
In the Revolut app, you can invest in cryptocurrency, such as Bitcoin, and buy commodities. If you do invest, cryptocurrencies can be stored in your Vault.
You can invest in stocks and shares too. You can even access the likes of Apple and Facebook through Revolut too.
N26 does not offer this feature at the moment either.
Do these digital banks offer traditional banking services, such as loans?
No, they don't, which is a slight impediment as some people like to do all their banking with one provider.
N26 does offer overdrafts in some other markets and it has plans to offer loans. It doesn’t offer overdrafts in Ireland at the moment, but there are plans to bring this feature here, likely within the next 12-18 months.
If N26 did start offering these other banking products, it would help people to perceive them as a bank, as opposed to just as an app or money management tool.
Mortgages are probably a good bit down the line as it’s more risky.
Revolut is an e-money licence business, so it doesn’t offer overdrafts, loans or mortgages here. The company has said it intends to apply for a banking licence in Ireland soon.
Revolut has also applied for an e-money licence in Ireland, so it wouldn’t use the Lithuanian one here anymore. This would mean that Irish customers would have an Irish IBAN.
Are these digital banks safe?
As N26 has a full banking licence, you’re covered by the Deposit Guarantee Scheme for up to €100,000.
With Revolut, you’re not technically covered. It ring-fences your money, so technically Revolut can’t access your money. If you have money in your Revolut account, that money gets ring-fenced into a client account from JP Morgan.
Theoretically, if anything happened to Revolut and it became insolvent, while you wouldn’t be covered under the Deposit Guarantee Scheme, your money wouldn’t be with Revolut and you’d be first in line to get access to the money.
Technically, there is slightly more risk with Revolut.
Both N26 and Revolut have really good fraud monitoring tools. You can get up-to-date push notifications on your spending, so if someone manages to steal your card and buy something, you’ll get a notification immediately to let you know about the purchase.
If Revolut thinks a transaction may be suspicious, it can ask you to verify it with a security code.
Customer service with both of these is lacking somewhat. The customer service in traditional banks is quite good. There’s always a person to talk to and doesn’t take too long to get through.
With the free accounts from Revolut and N26, you end up chatting with a Robot and it’s all done online, which can be frustrating.
This may be off-putting for older customers, who like the personal touch of in-person banks.
Which digital bank is best for travelling?
If you do travel a lot, then N26 is probably the better option. There’s no limit with N26 for foreign exchange fees, whereas Revolut has a €1,000 limit.
Having said that, Revolut recently launched a new service called Stays which allows customers to book accommodation for their latest holiday and get up to 10% instant cashback. It’s planning to also offer flight booking and car hire soon.
If you travel a lot, it may be worthwhile investing in a paid account for the added benefits. With premium accounts, both Revolut and N26 offer travel insurance, winter sports cover and compensation for delays or lost luggage.
With N26 there’s a German IBAN and with Revolut, customers will have a Lithuanian IBAN. In theory, it shouldn’t make a difference what IBAN you have in the EU since we’re all part of SEPA, but sometimes you do hear of IBAN discrimination.
This occurs when employers or utility providers have outdated payroll systems or payment systems that don’t recognise foreign IBANs. This is improving, but it is still an issue.
If you’re thinking of moving to a digital bank, make sure you check and see if your employer can pay your salary into one of these accounts.
What are the main differences between N26 and Revolut?
To summarise, here are the main differences between the two digital banks:
- Revolut has disposable virtual cards, which N26 doesn’t offer.
- Revolut has Revolut Junior to help parents manage their children’s money. N26 doesn’t offer a similar feature.
- The Vaults feature in Revolut is great. To access N26’s similar Round-Ups feature you need to be on a paid subscription.
- Revolut is an e-money licence business, whereas N26 is an actual bank that can affect the protection of your money.
- Revolut offers access to cryptocurrency, stocks and commodities. You can’t access these with N26.
- Both treat cash withdrawals differently, with Revolut having a €200 limit.
- Revolut has a limit on foreign exchange purchases of up to €1,000 per month, whereas N26 doesn’t.
- Revolut’s app is more fun, colourful and engaging.
- Revolut now offers an accommodation booking service, Stays, offering customers up to 10% instant cashback. N26 doesn’t have this feature.
At the moment, it seems like Revolut has more of an edge over N26.
If N26 starts to offer loans and overdrafts, this could change things. Having said that, if Revolut obtains its banking licence, this could help shift the favour back.
It depends on what people value. They’re worthy banking alternatives and people should check out one of them if they haven’t already.
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Have you tried Revolut, N26 or both digital banks? Which do you prefer and why? We’d love to hear from you!