Revolut to advance half of customer’s monthly wage
Workers who bank with Revolut will be able to draw as much as half of their salary as they earn it weeks before payday under a new service being launched by the lender.
The challenger bank, which has 3.5 million UK customers, will charge a flat fee of £1.50 every time a user accesses the pay they have accrued throughout the month, up to a limit of 50% earned the day after each new pay cycle begins.
Customers will be able to view their available accrued earnings and select the amount they want to withdraw directly into their main account, helping employees to instantly access their salaries earlier in the month to cover expenses or necessary costs, and avoid getting into debt.
Revolut has said its scheme will help ease the financial strain some consumers face between paydays.
The move comes as such salary-advance schemes become more common within the banking industry. However, concerns have been voiced that frequent use of salary-on-demand schemes, which at present are unregulated in the UK, can leave wage earners with a shortfall at the end of each month.
Revolut will need a partnership with employers to run the scheme and said it was in talks with several businesses. The service will only be open to Revolut account-holders who choose to have their salary paid in directly.
Nik Storonsky, the chief executive and co-founder of Revolut, said: “After the difficulties of the past year, the last thing employees need now is financial uncertainty. It is important to move away from a situation where many are dependent on payday loans and expensive short-term credit — a reliance exacerbated by the monthly pay cycle.”
Revolut plans to issue warnings to customers thought to be overusing its wage access service. It will also be able to gradually reduce the proportion of the salary a customer draws down.
The lender plans to roll out the service across the EEA and US in the coming months.