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Revolut has launched a commission-free trading service to try to challenge major trading platforms such as Hargreaves Lansdown and differentiate itself from rival new banks such as Monzo and Starling Bank.
Customers who pay for their monthly "metal" subscription service worth £ 12.99 will be able to buy and sell US stocks as of Thursday, while those who use the cheaper premium or free accounts from there will have access in the next few weeks.
André Mohamed, head of resources and trading at Revolut, said the company wanted to "democratize" access to investment and criticized the high fees charged by incumbents.
Free Revolut users will receive three free transactions per month and will pay £ 1 per transaction for any subsequent transaction. Premium subscribers – who pay £ 6.99 per month – will receive eight free transactions, while metal subscribers will receive 100 free. The app will not have a minimum investment size and will be the first European company to allow investors to buy fractions of shares.
Hargreaves Lansdown, the largest online trading platform in the UK, charges up to £ 11.95 per order, falling to £ 5.95 for the most frequent traders. Others, such as Interactive Investor, AJ Bell and Barclays, charge between £ 4.95 and £ 10 per transaction.
"If you dig deeper, it certainly does not cost £ 12 [to execute a trade]"Said Mr. Mohamed. Revolut hopes to make money mainly by encouraging users to subscribe to its subscription services, but added that the £ 1 fee for users exceeding their monthly quota was also "more important than the cost – this is not a waste of time for us ".
Revolut, which was valued at $ 1.7 billion at a fundraiser last year and is currently seeking to mobilize more cash in the coming months, is the most prominent European start-up that seeks to disrupt the stock market sector. His peers include Freetrade, a British company co-founded by Mr Mohamed, and BUX, an Amsterdam-based company.
However, as companies such as Freetrade and the American pioneer Robinhood focus on trade, Revolut's decision is also designed to strengthen its efforts to create a "global digital bank". The company initially specialized in cheap travel money, but has since expanded to cryptocurrency trading with a full banking license in the euro area and wants similar licenses in the UK and elsewhere.
Digital start-ups such as Revolut and Monzo have proven popular with customers who use accounts for travel or budget, but have been slower to convince people to use them as more regular banks.
Mr Mohamed said that the trading service would help increase the average amount of money that customers were pouring into the application, encourage them to log in more often and build trust in the business.
Despite the company's ambitious goals, the immediate threat to Hargreaves Lansdown will be limited by the limited choice of investment options offered by Revolut. At first, it will only offer US equities, the transactions being executed as part of a partnership with the US compensation company DriveWealth. Investments can not be held in tax envelopes such as Isa shares and shares or a self-invested personal pension.
Revolut acknowledged that the product construction had been more complicated and longer than originally planned, but it plans to expand its functionality over time to include UK and European equities, exchange traded funds. and the ability to invest through the intermediary of an Isa.
Nik Storonsky, Managing Director of Revolut, said: "Stock market investments have been banned for too long for citizens, which has created real problems for people looking for effective ways to optimize their savings."
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