Best Virtual Banks 2019 – Smartphone Accounts

Posted on 17th August 2019
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Virtual banks are financial service providers from the FinTech sector offering banking services exclusively online. This means that these banking providers have no branches and registration is generally only possible online. Among the specific services of such virtual banks are e.g. cheap cross-border transfers, international bank accounts (current accounts, SEPA) for travellers, internationally operating smaller businesses or freelancers and even debit cards that are easy to get.

In our comparison of virtual banks we show the essential features of the best providers in this area – so you will find the best solution for your banking needs at a glance.

In detail, we’ll compare the following Features:

  • What’s the company’s core service / main specialisation?
  • Does the company offer real bank accounts, if so, in which countries?
  • Do they provide real SEPA accounts?
  • Do they offer a card for payments and withdrawals?
  • Are international transfers possible?
  • What are the fees?

Best Virtual Banking Services Comparison:

What exactly are Virtual Banks?

virtual banking servicesThe exciting financial world is increasingly making great strides in technological innovation, with the goal of offering simpler, faster and more secure services to a growing segment of digital natives.

Today’s new customer typically performs the majority of his or her financial transactions remotely, i.e. via the virtual platforms of financial institutions.

Virtual banking, Internet banking or online banking involves access to various financial services that are offered digitally instead of going to a physical financial institutes. This virtual business mode allows customers to grant loans, make various payments and view their account statements remotely.

Creating a virtual bank is more complex than simply transferring products and services from an office to a website. The business model is completely different and there are already virtual banks, i.e. online financial institutions that offer products and services that are not available in a traditional bank branch.

The first smartphone accounts were by so-called Fintechs – young companies that bring together the world of finance and technology. They are called N26, Transferwise or Revolut and have no less goal than to stir up the banking market.

Virtual banks have many exclusive advantages for their users compared to traditional banks:

What are the Advantages of a Virtual Bank?

Part of the reason for the growing expansion of online banks worldwide is due to the advantages they offer over traditional banking. The advantages that we can find when we are customers of an online bank are particular:

Lower Fees

They usually have fewer commissions than traditional banks. Because online banks can save on office and staff costs, they pass these savings on to their customers and offer them accounts without commission for basic services.

24h Customer Service

Customer service is usually 24 hours a day. Although it is not a feature that applies to all virtual banks, it is usually repeated in most cases. You can contact an account manager via social networks or by phone 24 hours a day, seven days a week.

Independence from Office Opening Hours

We are not dependent on the opening hours of the offices. In contrast to traditional banking, where we have to come to the office for certain agreements (e.g. contract products), online banks allow us to do this from anywhere. So we don’t have to rely on the opening hours of bank branches, which is usually only the case in the morning.

Easy to understand Banking Products

The characteristics of the products are usually explained more clearly and transparently. Since vBanks do not have offices where customers can request information, this is usually easy to find on their website.

Despite all these advantages, virtual banking is not always the best option for everyone. First of all, people who are not used to working over the Internet would not want to open an account with such a bank as it would be difficult to perform the operation.

In addition, it is not recommended for customers to want to negotiate the terms of certain products, such as mortgages and loans.

Bitcoin Support

In today’s world, as cryptocurrencies are becoming an integral part of our financial system, it is important that banks do not ignore, oversleep or even fight this trend, but offer their customers the ability to easily switch between fiat currencies and cryptocurrencies. For our evaluation of a virtual bank, this is one of the most important criteria that should distinguish modern digital banks from traditional and often outdated ones.

What is the current Situation of Virtual Banks?

Virtual banks are currently in full expansion. A few years ago there was a minority of companies operating entirely over the Internet, but today many new players have emerged.

These are Fintech banks that have obtained a banking licence (or are waiting for one) and offer banking products to their customers. These banks work 100% over the Internet and some of them only via smartphones.

Some traditional banks are trying to join this banking trend by digitizing services and making them easier and faster accessible to their customers via the Internet. With many banks it is already possible to work 100% over the Internet, but also to go to the offices when an incident occurs.

You don’t know which Company to choose?

If you have any doubts about which bank is best for you and you don’t know how to decide, we have prepared a guide that will be of great help to you. This guide describes seven steps to choosing a new bank and shows you some options that suit your needs. The document is completely free and will be sent by e-mail in pdf format.

List of Virtual Banks

ePayments

ePaymentsePayments is another exciting virtual bank specializing in international transfers. What makes the company interesting is its wide range of services for private and especially online business customers.

The FinTech company is regulated by the FCA in Great Britain, where the company is headquartered.

What sets ePayments apart from other virtual banks is that they can handle all kinds of money transfers. This concerns international bank transfers via SWIFT or IBAN system, card payments, or payments to or from other online payment services such as Yandex, Qiwi, WebMoney.
ePayments can be used by online shops together with credit cards etc. as another payment gateway.

Customers who need to make payments in EUR via an IBAN account but do not have such an account will receive an IBAN account via ePayments.

The big advantage of ePayments is the easy availability of foreign bank accounts, but also the very low fees. Incoming transactions, for example, cost nothing. Also the ATM fee of $2.6 is fair and manageable compared to traditional banks.

Cryptocurrency Support?

What we particularly like about ePayments is their direct support of cryptocurrencies. Cryptocurrency wallets are part of every user’s ePayments account. So you can send or receive Bitcoin and certain altcoins and you can exchange those coins into fiat money by transferring them internally to your virtual fiat money bank accounts (EUR, USD, RUB).

ePayments Overview:

Target Group:
international freelancers, online businesses, shops, travelers
Product:
  • IBAN Bank accounts
  • no-fee international wire transfers
  • ePayments debit card
  • online shop payment gateway
Signup Regions:
worldwide
Specialization:
  • Borderless payments
  • mass payouts
Security Standard / Regulated:
FCA-licensed issuer of electronic money
Fees:
  • Local bank transfers: $3
  • Recieving bank transfers: 0-1%
  • SEPA transfer in EUR: $0.6
  • SWIFT transfers (international): 0.5%, min $15
  • To bank cards: 2.9%, min $3.5
  • Recieving from bank cards: 2.6%
  • Transfes to other supported digital wallets: 2%

N26

N26This is a German bank that works with the network from its mobile phone. In short, with this technology you don’t have to go to a bank to open or manage accounts.

This is done through an application called “N26 – The virtual bank”, which has a similar mechanism to other banks, but the difference is that there is no physical facility as we traditionally know it.

This service is available for Europe, the United States and some Latin American countries such as Colombia.

The start-up founded in 2013 began with a free current account model. N26 now offers a premium account and a premium credit card in addition to the free standard account. Through cooperation with other Fintechs, N26 has expanded its offering, for example with fixed-term deposits.

To register in N26, all you need to do is make a video call. After you have registered with the basic data on the platform, an operator calls you via the “App” and asks for some requirements, such as that you can see your face in the camera and show your ID, as is the case with a bank personally.

After this check, the user is active and receives a valid account number.

It is important to note that this system is only compatible with MasterCard debit cards that work just like any other style that we personally request from a bank. Once registered, it will be delivered to your home or preferred location within approximately one week.

The application sends notifications showing the movements that take place with your money. The base account has no commissions or requirements, although it charges a certain percentage when withdrawing money in a foreign currency. However, this can be avoided when a subscription is paid.

It should be noted that this bank has no physical branches and therefore no money can be withdrawn directly from it. You should therefore use the ATMs of other banks to make the appropriate withdrawals. And although withdrawals from other companies generally cause additional costs, N26 promises that every time you withdraw money, it will be completely free.

Cryptocurrency Support?

As far as we’ve heard N26 is about to integrate cryptocurrency support, but they aren’t yet finished with that. However, this shows that N26 is a banking service which is generally definitely Bitcoin friendly, in contrast to many traditional banks that decline incoming transfers from crypto exchanges and stuff like that. It’s incredible that this still happens today, since Bitcoin has long become a serious asset / currency. So at least N26 doesn’t belong to the banks that ban Bitcoin, and, as said, they will soon offer direct cryptocurrency support.

N26 Overview:

Target Group:
travelers
Produkt:
  • Bank accounts
  • low fee money transfers
  • Debit Card
Signup Regions:
Europe, US, Latin America (partially)
Specialization:
  • International bank transfers
  • Simple banking app
  • Business Accounts for Freelancers and self-employed
Security Standard / Regulated:
€100,000 (about £85,000) FSCS protection
Fees:
  • Regular: €0 / month
  • N26 You: €9.90 / month
  • N26 Metal: €16.90 / month
  • No added exchange fees
  • 1.7% ATM (0% for GBP or N26-Metal members)
  • real exchange rates, no extra charge

Revolut

RevolutThe British start-up has been offering its accounts in Britain and certain other countries since 2017. Similar to N26, there is a free account and a premium offer. With the additional service Revolut supports among other things the purchase and sales of cryptocurrencies.

Revolut accounts can’t be accessed through their website, account management works through their mobile app only.

An account with Revolut makes sense above all if you need to use in an intensive way the service of currency exchange / international transfers or the purchase of cryptocurrencies.

In any case it will be necessary to be attentive to the services that they are adding, since they have an approximation to the banking service that if they continue expanding could be a serious alternative to a bank of all life.

Overall Revolut is a quite interesting banking alternative for European residents, however there are some weaknesses. Free accounts are very limited while the payed subscriptions come with relatively high fees for a smartphone bank. The monthly cost of €7.99 is comparable to traditional bank accounts, but the latter offer way more services such as credit cards, bank cards without withdrawal limits, deposits, mortgages, access to purchase of shares, a variety of loan products, bank checks, filing tax returns, payment of taxes etc.

Cryptocurrency Support?

Revolut is an absolutely crypto friendly service since they directly support Bitcoin – just like with ePayments there are crypto wallets in every Revolut account and users can use the Revolut app to directly buy or sell Bitcoin and certain altcoins (LTC, ETH, BCH and XRP).

Revolut Overview:

Target Group:
travelers, international operation businesses
Produkt:
  • Bank accounts
  • low fee money transfers
  • Debit Card
Signup Regions:
Europe only
Specialization:
  • Banking for travelers
  • International bank transfers
  • Simple banking app
  • Business Accounts
Security Standard / Regulated:
€100,000 (about £85,000) FSCS protection
Fees:
  • ATM Withdrawal: 200GBP/month for free
  • Premium Account: 6.99 GBP/month; free withdrawal limit 400 GBP/EUR
  • 3.15 USD per transaction
  • Currency conversion: up to 3.5%
  • Mastercard Fee: 29.95 USD / year
  • Transfer fees: None below certain limit, otherwise 0.5% (always free in premium plan)

Transferwise

TransferwiseThis is another young FinTech company from Great Britain, founded in 2010. The company started by sending money via app on the smartphone (“peer to peer”). The main focus was on money transfers in foreign currencies. Transferwise However, today it has a wider range of possibilities, e.g. the so called borderless account including bank accounts in many different countries.

Basically, this platform works like a typical exchange house that you could find in any city in the world. The big difference is that it works exclusively digitally (so the costs are lower) and between two bank accounts.

The service can be used either through their mobile app or their website.

Cryptocurrency Support?

Transferwise doesn’t directly suppot cryptocurrencies, so there are no crypto wallets in user accounts. However, the service is generally crypto friendly, since they don’t ban incoming transfers from cryptocurrency exchanges. People who want to cash out their Bitcoin can do so on an exchange like BitStamp, BitPanda, Kraken etc. and then transfer the fiat money to their Transferwise account.

Transferwise Overview:

Target Group:
travelers, international operation businesses
Produkt:
  • Foreign Bank accounts (Borderless account)
  • Transferwise debit card
Signup Regions:
worldwide
Specialization:
  • Banking for travelers, expats or international freelancers
  • Money transfers to other currencies
  • Simple banking app
Security Standard / Regulated:
regulated in all countries where they operate, full refunds in case of company insolvence through cooperating banks
Fees:
  • No subscription fee
  • very low transfer fees
  • ATM: first 200 GBP, 250 USD/month free,
  • then 2% charge on withdrawals

Payoneer

PayoneerThis money transfer service is quite popular among people working through the internet for clients from different countries. Payoneer makes it especially easy to get payed including automated invoices.

There are even more money transfer services that target freelancers and the self-employed and optimize business accounts for smartphones, such as Penta or Holvi, for instance. They offer real-time tax assessments, accounting tools and expense management.

The service offers a debit card just like the previous ones, but you should consider the costs. If you pay out in another country in another currency, up to 3.5% are due. In addition, withdrawals cost $3.15 and a denied/canceled withdrawal costs $1. The card can be used for electronic payments at no additional cost.

Cryptocurrency Support?

With Payoneer you cannot directly buy or sell cryptocurrency within the digital banking service, but they don’t have a problem with cryptocurrency which means that there are crypto exchanges that directy support payoneer deposits and withdrawals such as Paxful or LocalBitcoins. If you want to cash out your Bitcoins to your Payoneer accounts, you need to make the exchange from BTC to fiat money on e.g. Localbitcoin, from where you can send the fiat money to your Payoneer account.

Payoneer Overview:

Target Group:
international freelancers / self-employed
Produkt:
  • Payoneer e-wallet, local currency accounts
  • Payoneer debit card
Signup Regions:
worldwide
Specialization:
  • Borderless payments
Security Standard / Regulated:
Federal Deposit Insurance Corporation (FDIC) regulated
($250,000 standard deposit insurance coverage limit)
Fees:
  • Customer Payments by Credit Card 3%
  • Echeck (USD) 1%
  • Bank Transfers via receiving accounts free, but 0-1% for USD
  • Card Loading Payments $3.00
  • Monthly card account maintenance $3.00
  • Monthly card account maintenance from 5 transactions per month $1.00

Monzo

MonzoMonzo, founded in 2015 in the UK, is another promising fintech company in the virtual banking sector, made for the day-to-day life of a modern society like the one we live in. They also have no branches and you can have a current account and Mastercard debit card fully operational, as if it were a traditional bank.

Unfortunately, for the moment, you can only apply for a Monzo account if you live in the UK (and are over 18 ). There it already has more than 800,000 users.

The virtual bank account comes with a pink Mastercard debit card that can be used anywhere in the world.

The Monzo card is managed from its mobile app offering a wide range of notifications that will warn a user as soon as an expense is made that is categorised as Restaurants, Transport, Cash, Shopping, Entertainment, Vacation and others.

Citizens from other countries officially residing in the United Kingdom can their Monzo card. All you have to do is open an account, wait for the card to arrive at your home and finally download the mobile app to enjoy the virtual bank’s advantages.

When you have your active account you will receive an account number and a code, which will allow you to direct deposit your salary and make bank transfers. Also, you can set spending limits per month in any of the spending categories you have defined. It’s quite similar to the US banking app of simple.com.

Cryptocurrency Support?

As far as we could find out Monzo can generally be used for Bitcoin traders, who intend to make money transfers from or to crypto exchanges every now and then, in case it’s not about large amounts. Larger money transfers always trigger the “anti-money laundering red flag” and it might happen that it then won’t work with Monzo. But be aware that Monzo doens’t directly support cryptocurrencies and there is no guarantee that they will be okay with transfers from crypto exchanges. Better go for ePayments or Revolut if you’re much into crypto.

Monzo Overview:

Target Group:
Modern UK citizens
Product:
  • virtual accounts
  • no-fee withdrawals abroad
  • real exchange rates, no mark up
  • app with spending control funcionalities
  • earn interest on your savings
Signup Regions:
UK only
Specialization:
  • cheaper banking
  • personal money management
Security Standard / Regulated:
authorised by PRA, FCA and PRA regulated
deposits FSCS-protected up to £85,000 per person
Fees:
  • ATM: up to £200/month free, then 3%
  • Card payments free, but Mastercard exchange rate applies
  • Card payments abroad free

Bunq

Paysera

Monese

Security for Virtual Bank Accounts

bank buildingsUntil now, the two-device rule applied to online banking: for security reasons, you should not receive the TAN on the device on which you carry out your banking transactions. The TAN is a six-digit number that is required to release a booking.

With many banks, it was not possible to have the TAN sent to the same device on which you previously created the transfer. In the case of smartphone banks, however, banking only takes place on one device.

Smartphone banks usually secure accounts and banking transactions using different methods. You first have to log into the app, for example with a password or fingerprint. An additional PIN is then required for transfers. The fixed link to a specific smartphone, push messages for transactions and self-defined limits (to prevent unauthorized transfers beyond the limit) can increase security.

However, it is not only the bank’s behavior that is important for the security of your banking transactions. Keep the operating systems of the end devices on which you conduct your banking transactions up-to-date. Secure the devices additionally with antivirus programs. These are also available for smartphones.
 

Further Literature / Links:

[1] https://www.fscs.org.uk
[2] https://www.fca.org.uk/firms/financial-services-register
[3] https://register.fca.org.uk/
 

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One Comment on “Best Virtual Banks 2019 – Smartphone Accounts”
  1. Jaffer wrote on 22nd October 2019 at 6:33 amh

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