Revolut an English fintech company offering banking and investment services to consumers. Founded in 2015 by Nikolay Storonsky and Vlad Yatsenko, the company initially produced a low-rate travel card. Storonsky in particular was an avid traveler who became tired of spending hundreds of pounds on currency exchange and foreign transaction fees. The Revolut app and core banking account are free to use. Instead, money is made through a combination of subscription fees, transaction fees, perks, and ancillary services.
Revolut is a British fintech company offering consumer banking and investment services.
The company was founded in 2015 by Nikolay Storonsky and Vlad Yatsenko after the former became tired of spending hundreds of pounds on currency exchange and foreign transaction fees while traveling.
With a background in finance, Storonsky knew that the rates he was receiving were not the best rates currency exchange platforms could offer consumers.
Unable to find a solution that minimized the cost of spending money overseas, Storonsky and Yatsenko set about developing one themselves.
Revolut’s first product was a travel card that enabled international travelers to change money into thirty different currencies at market rates.
The Revolut exchange platform was officially launched in July 2015 with a small round of investment funding worth $3.5 million.
Additional capital and expansion
In 2016, Revolut passed 100,000 users and secured Series A funding worth $15 million.
This was followed by a Series B round in 2017 ($66 million) and a Series C round for $250 million the following year.
At some point, Storonsky and Yatsenko pivoted somewhat and built a super app for younger consumers who preferred to access financial services on their smartphones.
Investment capital was used to expand Revolut’s product lineup with crypto trading, business accounts, and a donation service where users could support international charities.
At the end of 2018, the company received a banking license from the European Central Bank, which authorized it to offer consumer credit and accept deposits.
Six months later, Revolut launched commission-free stock trading on the New York Stock Exchange (NYSE) and NASDAQ.
The company added extra functionality to enable users to book vacations from their app and withdraw earned pay ahead of time to manage their expenses.
Revolut revenue generation
The Revolut app and core banking account are free to use.
Instead, money is made through subscription fees, transaction fees, perks, ancillary services, and payment for order flow.
Subscription plans
Firstly, there are three paid plans which give extra functionality to the core banking account:
Plus (£2.99/month) – offering the free UK and Euro IBAN account with a customizable card.
Premium (£6.99/month) – offering all Plus features in addition to exclusive card designs, 24/7 priority support, and access to so-called Junior features that help kids manage their money.
Metal (£12.99/month) – offering all Premium features, cashback on card payments, and three free international payments per month. Premium users are also sent a 100% contactless debit card made from reinforced stainless steel.
Rewards
The Revolut Rewards scheme allows users to enjoy personalized cashback offers and discounts on eligible purchases.
Rewards bonuses are credited to user accounts and encompass purchases from entertainment, travel, restaurant, grocery, and retail businesses.
In all likelihood, Revolut receives a commission from each merchant and then gives its users a portion of the fee as a bonus.
Insurance
The company also has two insurance options:
Device insurance – global coverage is offered for £1 per week and covers all accidental damage.
Travel medical insurance – here, Revolut uses geolocation technology to only charge consumers for days they are overseas. Medical and dental coverage starts from as little as £1 per day.
Trading
The Revolut trading platform allows users to trade stocks, commodities, and cryptocurrencies such as Bitcoin, Ether, and Stellar.
Users can get started for as little as £1 by purchasing fractional shares.
Plus and Premium subscription members can access a certain amount of free monthly trades. Each additional trade is charged at a flat fee.
Loans
Users can also take out a personal loan for between £500 and £25,000 with a payback period of 1 to 5 years.
The company makes money by charging interest on the loan and, where applicable, overdraft fees for late payments.
Payment for order flow
Payment for order flow consists of a “kickback” or commission that the broker routing customers to a market maker (in charge of enabling the bid and ask price) will pay a commission to the broker as a sort of market-making fee.
Revolut also collects payment for order flow (PFOF) to earn money from commission-free trades.
Essentially, PFOF is the compensation a broker (Revolut) receives from a market maker for sending customer trade volume their way.
Key takeaways:
Revolut is an English fintech company offering banking and investment services. It was created after co-founder Nikolay Storonsky became dismayed at exorbitant foreign exchange and transaction fees while traveling abroad.
Revolut offers three paid plans which give extra functionality to their free bank account. The company also earns a commission through its cashback and rewards scheme.
Revolut has also established itself as an insurance and personal loan provider. Additionally, users can invest in stocks, commodities, and cryptocurrencies in fractional amounts.
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Gennaro is the creator of FourWeekMBA, which reached about four million business people, comprising C-level executives, investors, analysts, product managers, and aspiring digital entrepreneurs in 2022 alone | He is also Director of Sales for a high-tech scaleup in the AI Industry | In 2012, Gennaro earned an International MBA with emphasis on Corporate Finance and Business Strategy.
