Revolut launches commissionless trading service at Robinhood

British fintech Revolut is launching online brokerage with its own commission-free trading platform.

The company launched the service – which allows users to buy or sell popular US stock from Apple to Beyond Meat with one click – Thursday, with the aim of seducing the millennials who usually hesitate to invest.

Individuals will also be able to purchase a fraction of these shares, with a minimum of $ 1 of stock. Revolut says this decision means it's the "first company" to bring small fractions of US stocks to Europe.

"It's about including people who have never been allowed to develop their personal wealth," Andre Mohamed, leader of Revolut's trading team, told CNBC in an interview, adding that the weak interest rates made saving difficult.

"This gives them another way to accumulate their personal wealth from a younger age, in a simple and economical way."

Created in 2015, Revolut has gained popularity in the UK and Europe with a service that allows people to spend abroad without paying fees. It is considered one of the many popular "challenger" banks among younger consumers with application-based chequing accounts. Among the rivals of Revolut are Fintech British firm Monzo and German N26.

The company's commercial transaction comes after Robinhood's failed attempt to create chequing and savings accounts last year. The company, headquartered in Menlo Park, Calif., Has been making waves in the US with its free securities exchange service, but its banking efforts have caused difficulties due to regulatory issues .

Revolut announced that it has partnered with the US broker DriveWealth, which would facilitate background transactions, to create an investment service. Although this is not necessarily a direct revenue factor for Revolut, the company hopes to make money on the platform as its core service users become more active and opt for the premium offerings. l & # 39; application.

The new feature is currently only available to users with the Revolut Metal Card – who pay around £ 13 ($ 16) a month – but the company has announced that it will be distributed to D & # 39; 39, other customers in the coming weeks.

Standard users will be limited to three free transactions per month, while Premium customers – who pay around £ 7 per month – can make up to eight free transactions and metal users get up to 100 free transactions. The additional transactions will be billed at £ 1, Revolut said.

The news also comes as Revolut prepares for an expansion in the United States. While the company will no doubt be perceived as an attempt to badume Robinhood, Mohamed de Revolut said the comparison was not justified.

"We have the ecosystem, it's not really a fair comparison," he said. "We're just going to offer more than they can, it's also a different demographic, and from a pricing perspective it's a freemium model that generates subscriptions."

Mohamed was appointed to lead the Revolut Wealth and Trade Unit at the end of last year. Before joining Revolut, he co-founded another commission-free trading platform based in the UK, called Freetrade.

Viktor Nebehaj, marketing director at Freetrade, told CNBC that although some functions of Revolut's trading function had a "strange resemblance" to the application of his company, he praised the competition.

"Having more choices, it's fantastic," Nebehaj said. "It's really healthy to have competition, it keeps us on our feet." Freetrade said it had seen a video demonstration of the product before its release.

Although Revolut's service does not charge a commission, it will eventually charge a fee of 0.01%, if applicable, for the standard and non-standard customers. premium. It plans to gradually add UK and European equities, exchange-traded funds, equities and ISAs.

London-based Revolut attracted more than 6 million users, raised $ 340 million and was valued at $ 1.7 billion by investors. In contrast, Robinhood was recently valued at $ 7.6 billion and had 6 million brokerage accounts at the end of 2018. Both are backed by Russian technology billionaire Yuri Milner's venture capital firm DST Global.

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