The sprawling growth of challenger or online banks has brought many benefits. Individual customers have been the largest beneficiaries of these benefits, especially with these banks’ customer-centric approach.
Over the years, the banks have realised that they’ve locked out another vibrant market; the business market. More and more FinTechs are now providing business accounts that allow businesses to enjoy the same convenience, expediency and lower fees when sending and receiving payments or sending their employees abroad.
The features offered under the business account vary depending on the provider, making it crucial because making the wrong choice could impact the business’s bottom line and compromise its cash flow, ultimately, its lifeline.
In this guide, we’re comparing two of the leading online banks, Monzo and Starling and their business account offering to see what they can offer businesses.
This side-to-side comparison looks at the different features and benefits you might get with a business account on either Monzo or Starling Bank. It’s a great place to start to give you a general idea of what to expect with either service before giving everything a closer look.
Current account with Debit Mastercard
Current account with Debit Mastercard
Monthly fee for the business account
Main account: Free
Business Toolkit: £7
Lite plan: £0
Pro plan: £5
UK-registered/-based companies & sole traders
UK-registered/-based companies & sole traders
Entirely through app
Entirely through app
Account no. & sort code included?
Bank transfers, Direct Debits, standing orders
Bank transfers, Direct Debits, standing orders
Euro & USD account options
Via third-party lender
Only with co-directors
Yes, on Pro plan
Monzo and Starling are leaders in their fintech space, offering personal and business accounts to their users. Although their personal offerings might look very similar, they are vastly different in their business accounts. This can be good or bad. On the one hand, it makes it easier for businesses to choose the right service, but on the other hand, not having formidable competition means there are not many benefits for businesses in terms of competitive rates.
Current accounts are managed online
One of the measuring points of the strength of a platform as far as business accounts are concerned is the effectiveness of their current accounts and how they can be managed online. Both platforms have fully-fledged bank accounts that can be managed online through a mobile app or browser, although the features might vary slightly between the providers.
Although these are digital banks that heavily rely on technology, they have a customer service team that can be contacted 24/7 by telephone, chat, or email in both cases.
With Monzo, creating a business account requires that you first create a personal account before adding the business account.
With Starling, you don’t need a personal account if you’re a company. But a personal account will be necessary when setting up a Sole Trader account.
Once you have the Starling Business account, you can add the ‘Euro’ account for your EUR or a US dollar account for your USD. The other option is for the GBP currency only. Remember that the Euro and the USD accounts have monthly fees.
Monzo only provides one business account for sole traders and registered companies. But there’s a choice between two tiers: Business Lite (free) and Business Pro (£5 monthly) options.
Besides the monthly rates, the two accounts differ in the number of features. The Business Lite account has limited features which are better suited for Sole Traders, while the Pro is better for companies that need robust features and have more to manage.
Business account holders can get a debit Mastercard with either provider. This is better than most challenger banks in the UK that only offer prepaid Mastercards, which are not as readily accepted as a full debit card. Still, there is no credit card option for businesses from these banks which can be earmarked as an area for growth.
IBAN and international transfers
IBANs are crucial for businesses, especially if they’re sending and receiving money internationally. Because these digital banks don’t have a physical presence, they use a Virtual IBAN or a vIBAN, which works the same way as the traditional IBAN.
Only the Starling business account has an IBAN, allowing you to receive and send money internationally. Monzo accounts don’t have an IBAN, which is a substantial downgrade because that means you cannot send or receive money internationally.
Monzo personal accounts are integrated with Wise, which allows users to send and receive international transfers through Wise, but this doesn’t apply to business accounts.
Loans and overdrafts
Access to loans and overdrafts is crucial to businesses. They are a quick way to add liquidity and cover cash crunches. Only Starling offers overdrafts and business loans using the Recovery Loan Scheme (RLS). Monzo works with a third-party lender offering business loans for Monzo Business account holders. However, this doesn’t include the COVID loan schemes.
There’s no overdraft facility with Monzo’s business. This is only available for personal account holders. But the businesses can work with the third-party lender to secure a loan.
Looking at the main features, it’s clear that Starlings is better positioned to take care of businesses’ domestic and international needs. Starling offers better facilities and even has overdraft and loan facilities for businesses. Businesses getting an IBAN number is another huge factor because it allows them to trade and source globally.
Costs and Fees
Costs and fees are essential factors for businesses to consider when getting a provider for their accounts. Luckily, both Monzo and Starling Business accounts offer good value with their free standard account options. They also offer free charges for UK payments.
Both providers also have paid account options, with Starling Bank having more. It has a USD-currency account at £5 per month, a EUR-currency account at £2 per month and a feature-rich business toolkit add-on that goes for £7 a month.
Monzo only offers an upgrade to Business Pro for £5 a month. The free plan has more features than the Starling free plan account but still lacks international payments, which locks out businesses dealing with international payments.
With both providers, you get a free debit card. UK payments and transfers between same-bank accounts are free with both providers.
There are no set-up costs for the business debit cards. Also, domestic payments in sterling pounds and ATM withdrawals within the UK are free.
International transfers and use abroad
Currently, Monzo is only suited for businesses with UK clients. Their business account lacks the capacity for international transfers except if you use an IBAN generator, which is the only way to work around the problem but is highly discouraged.
Although you can’t use Monzo to make and receive payments from abroad, you can use the Monzo debit card abroad for payments in any currency. Within the EEA, cash withdrawals using the debit card are free. But outside the EEA, only the first £200 withdrawn monthly is free. After that, you incur a 3% charge.
Any necessary currency conversions incur Mastercard’s wholesale rate with nothing added on top, which is commendable and could save businesses a lot of money.
On Starling, cash withdrawals abroad are all free. Currency conversions are done using the real exchange rate rather than Mastercard’s exchange rate, which is even better. You can also send and receive international SWIFT transfers using the Starling business account.
When receiving a transfer from abroad in the same currency as the Starling account (GBP, USD or EUR), you’re not charged. The exception is only if a EUR payment goes into a GBP account. This costs 2% on top of the real exchange rate. The Euro account costs £2 monthly, and the USD account goes for £5 monthly.
The cost for sending a SWIFT payment on Starling is 0.4% of the transfer amount on top of the real exchange rate +£5.50 delivery fee and 30p if using a local partner for this transfer method.
You can enjoy free cash withdrawals in the UK and abroad with Starling, while Monzo offers free withdrawals in the UK. In EEA, there are no fees for the first £200 each month; then, a 3% withdrawal fee is attached to every amount after that.
Cash deposits on Starling are charged at a rate of 0.3% or a minimum of £3 at the post office, while Monzo charges £1 at PayPoint.
You can make cheque deposits on both challenger banks without any fees, but the processing times vary greatly. Starling takes only 2 working days to process the cheques, while Monzo takes 2-3 weeks to process the checks. On Starling, you can deposit your cheques using the App, but Monzo requires that you use Freepost to send the cheque.
Besides offering a broader range of services and money transfer options, Starling offers more free withdrawals and better currency conversion rates using the real exchange rate, not the Mastercard rate
Challenger banks have made it a norm for customers to expect the latest features on the apps. The banks regularly release new technology to stay ahead of the curve. You should expect the same with your business account. These app features could make running and managing your business account easier and entirely from the mobile app. Both banks also offer desktop access too. But the account features are more limited there.
Here are some of the features you can expect when using Monzo and Starling business accounts;
With both banks, you can send money, set up Direct Debits, subscriptions, view subscriptions, and standing orders. However, Starling sets itself apart by allowing SWIFT payments from the app.
You can categorise your payments into colour-coded topics like office rent, wages, and utility bills. The apps also have a push notification feature that notifies you every time money is spent so you know what is going on with the account. This is helpful when different people have access to the account.
Monzo also lets you set spending limits for different categories. You can also set the expenditure period, making it easier to stay on budget and monitor your expenses. Monzo offers a better platform for businesses to organise and monitor their spending more effectively.
Put money aside for goals
Starling has a feature they call “Spaces”, where you can set aside money for different goals. Monzo calls theirs “saving pots.” They are basically the same thing and function within the account. With either feature, you allocate money into ring-fenced spaces and reserve it for dedicated purposes such as taxes, a business trip or even new computers.
The money put in these pots and spaces does not form part of the main account balance but can be freely transferred back to the main balance when needed.
Starling has an additional feature that you can use to ‘auto-save’ money from the main balance to the allocated spaces by rounding up transaction amounts automatically.
With Monzo, you can schedule outgoing and ongoing transfers between pots and the main balance. You can also choose to lock pot balances to a certain date to keep you from using them.
As far as managing funds and providing businesses with the tools to set money aside for their growth and expenses, it’s safe to say that both options have done exceptionally well. They have the basics down and a few more nifty features for businesses that might be interested.
One of the benefits of challenger banks is that you have more control of your card than you do with a traditional bank. If you lose the card, you don’t have to wait until you get in touch with the bank to cancel or freeze the card.
Monzo and Starling allow you to order, cancel, freeze and unfreeze your debit card. You can also block swipe and gambling payments from the app giving your business a better grip on what the card user can use it for.
Starling excels with more detailed card controls, such as prohibiting ATM withdrawals, card machines, or online payments. These features prove helpful to businesses trying to minimise the wastage of resources and make monitoring of funds easier and more effective.
With business accounts, invoicing is a huge factor to consider when choosing your provider. You want to send professional invoices quickly and efficiently while making it easy for clients to send payments to the same account.
Monzo and Starling offer invoicing features only on the respective paid plans. Monzo Business Pro subscribers can send and manage email invoices from Monzo or online through the website. On the Starling Business Toolkit add-on, you can manage invoices from the Starling web dashboard but not the app. It’s slightly limiting because it means you must log into your account whenever you want to manage your invoices. Nonetheless, it’s still handy when logging into the web dashboard.
Both Monzo and Starling allow more than one person to access the business account. Under Starling, co-directors can access the account apart from the original account user. With Monzo, you have to be on the Pro plan to allow more than one person from the same company to use the same account. However, with Monzo, no permission settings mean all authorised users on the platform can access all information and perform all functions.
All starling business accounts can be integrated with external accounting programmes for smooth bookkeeping. With Monzo, these integrations are only possible on the Monzo Pro Plan, not the free Lite Plan.
Besides the functions and features that both of these banks share, they also have some unique functions that set them aside from each other;
Under the Starling Business Toolkit add-on, you get a range of business management functions made for freelancers. There’s a wide range of features available under these functions, including;
- Payment Scheduling
- Self-assessment tax estimations
- Recording and submitting tax information for HMRC
- Email integrations
- Expense tracking
- Bookkeeping to-dos
These functions can only be accessed through the web dashboard. They’re not available on the app.
The Monzo Business account is limited in the special features aspect compared to Starling. But they have a new payment link feature that allows users to send payment requests online. These requests are processed and charged for by Stripe.
Also, under the Monzo Business Pro plan, you can;
- Automatically deduct taxes into a special tax pot easing the process of filing tax returns.
Starling offers better standard features and also has more advanced and unique features than Monzo.
Customer Support and What Customer are Saying
In business, getting assistance at the right time is essential. Which is customer support is a crucial factor to consider. In the ideal situation, the customer support team should be easy to reach and fast to respond.
Monzo and Starling provide round-the-clock customer support using various channels like in-app messaging, email and over the phone.
However, while there are multiple ways to reach customer support in each bank, there are significant differences in the quality of service. So much so that Starling Bank has won awards for being the best British bank in 2020, which aligns with what many customers’ online reviews indicate.
Many users praise the service and account features that Starling Bank offers. It’s said to be highly efficient with responsive customer support. One of the complaints highlighted is that certain support queries are lengthy and unnecessarily tedious. It could be the bank’s way of getting to know their customers better, but it’s just not resonating with them.
Monzo has had its fair share of struggles. The most highlighted ones are account holds, where funds and transactions are held for a long time for no clear reason causing a lot of stress and financial hardship for the business. In business, every minute counts. You can understand the frustration of revenue being tied up for no good reason.
The complaints about Monzo having a high number of account holds were confirmed by BBC Watchdog, which confirmed the number of frozen accounts was greater at Monzo than at all other British banks in 2019/2020. However, with reduced reports, it’s like Monzo has improved.
Also, customer support for Monzo is not as highly regarded as with Starling. Although they have the same contact methods, Starling is said to be more responsive to its customers.
Customer reviews about Starling Bank’s business accounts show why it has been the best bank award winner for three consecutive years. They have followed up their great feature collection with superb customer service, which is evident in the customer reviews they’ve gotten.
Monzo Vs Starling Business Account: Which One to Choose?
Monzo and Starling are similar in many ways. But after closely looking at both of them and comparing every aspect, it’s clear that Starling is more polished and offers better business accounts than Monzo.
Among the factors that make the case for Starling is their more professional and efficient customer support, who are said to be very friendly. Also, Starling has superior features and functions that businesses can take advantage of to grow and better manage their revenue and cash flow.
Monzo, on the other hand, has one glaring downside, the lack of international payments. At a time when the world has become a global village, and even small businesses can transact across borders, not providing businesses with options to send and receive payments internationally is a huge concern.
Though helpful, most of the other features Monzo offers in its business accounts are more basic than Starling. Also, piggybacking on other platforms to provide some services like loans puts Monzo at a disadvantage.
Starling’s range of features and services is more appealing to businesses. It offers its own loans, bank overdrafts, Euro and USD accounts, advanced debit card controls and SWIFT transfers. Also, most of these features are available at no monthly cost.
The Starling Business Toolkit does require a monthly fee, but you get value for what you pay because of the comprehensive accounting tools you get for a Sole Trader.
Not all is lost for Monzo. It has some innovative features for businesses trading within the UK only. Stripe payments are one such feature that is handy and available on the free account. The additional settings for saving pots and budgeting features on Monzo are top-notch. Still, it is safe to say that the personal account features on Monzo are more comprehensive than the business account features.