Why does N26 abolish the free Mastercard

Berlin-based billionaire fintech company N26 is increasingly pushing its customers into fee-based account models. The latest measure: as the challenger bank announced on March 17th, new customers with the free standard account will only receive the physical debit card for a one-time fee of $12 (€10). If customers do not want to pay this surcharge, they must basically switch to the virtual Mastercard Debit, which is stored in the app. Nothing will change for existing customers.

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What other changes has N26 made

According to Finanz-Szene.de research, what is also new is that new customers with the free account are only allowed to test the sub-accounts called “Spaces” for 60 days. Anyone who wants to use them permanently must switch to a paid model or receive an invitation to co-use them themselves. Until now, two sub-accounts per free account have been permanently free of charge.

The pricing of the physical Mastercard raises doubts as to whether N26 is still serious about its officially postulated 100 million customer target. After all, it is probably not only due to the Corona crisis that Neobank gained only two million net new customers in the past year instead of the more than five million originally targeted. In reality, N26’s pricing policy has long been aimed at monetizing customers instead of growing at any price. Specifically:

Two years ago, N26 eliminated phone support for the standard account and limited the service to the most expensive account variant. From now on, “normal customers” should contact the bank via the chat function. In May 2020, N26 cut free withdrawals for customers under 26 from five to three euros per month

In the fall, the Berlin-based company then launched the “N26 Smart” account, priced at $5.80 (€4.90) per month, as an alternative to the free model In January, N26 drastically reduced the flat-rate new customer bonus for affiliate partners. And now the physical Mastercard and two free Spaces are also eliminated from free accounts for new customers

For active users of the N26 current account, the said 10 euros are de facto tantamount to a compulsory fee. After all, there are still point-of-sale terminals and especially ATMs that cannot be used with a virtual card. The only alternative is to cover your cash needs via NFC-enabled ATMs or the “Cash 26” partners in the retail sector. From N26’s point of view, however, these restrictions even have a practical side effect. After all, if you can’t withdraw money at all – you don’t incur any costs (because banks and other ATM operators naturally charge N26 for the use of their machines).

Meanwhile, it is astonishing how the fintech company justifies the elimination of the physical card weighing around five grams in its blog – namely, among other things, that customers now have the opportunity to opt for a “banking experience without a card and free of plastic (…).” In other words, N26 says it wants to accommodate those customers who “prefer to make a sustainable choice and, if possible, [do] without plastic. We think you should be able to decide that for yourself.”

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First published in finanz-szene.de, a third-party contributor translated and adapted the article from the original. In case of discrepancy, the original will prevail.

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