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Banking News

Revolut, Neon & Co. Cheapest for International Card Transactions

February 26, 2020 - Benjamin Manz

Independent Swiss comparison service moneyland.ch compared payment cards from Revolut, Wise (TransferWise), Neon and Zak with other Swiss credit cards and debit cards. The results show that compared to conventional Swiss payment cards, cards from the app-based banking services are significantly cheaper for purchases and cash withdrawals outside of Switzerland.

You can find an overview of smartphone banks in Switzerland here

App-based banking and financial service providers have reached Switzerland and are challenging conventional banking models. The new players advertise low fees and user-friendly apps. But are these challengers really as cheap as they make advertise themselves to be?

To find out, moneyland.ch analyzed the cost of cash withdrawals and point of sale (POS) transactions both inside and outside of Switzerland in euros (EUR), United States dollars (USD), British pounds (GBP) and Thai Baht (THB). The comparison included cards from app-based accounts Zak (Bank Cler) and Neon (Hypothekarbank Lenzburg partner), and foreign app-based financial services Revolut and Wise (TransferWise). It also included standard credit cards and debit cards from Credit Suisse, PostFinance, Raiffeisen, UBS and the Zürcher Kantonalbank, and four Swiss no-annual-fee credit cards.

Verdict: App-based services Neon, Revolut and Wise are significantly cheaper for foreign transactions than both Zak and Swiss credit cards. If you occasionally make cash withdrawals outside of Switzerland, Revolut and Wise are the most affordable solution for cash withdrawals outside of Switzerland. If you withdraw large amounts of money outside of Switzerland, the PostFinance Private Account Plus, Neon and Zak Plus are the most affordable options.  

Cost of POS transactions outside of Switzerland

Two different profiles – a frequent-user profile and an infrequent user profile – were used by moneyland.ch for the POS transaction cost comparison. The cost comparison accounts for currency exchange rates sampled across five random days in January 2020. It also accounts for foreign transaction fees, annual card fees and rewards (cash back or points) across one year.

The frequent-user profile is based on 12,000 francs of purchases at POS terminals per year. The profile assumes that of these purchases: 2000 francs are made in Switzerland in Swiss francs; the equivalent of 2000 francs are made outside of Switzerland in euros; the equivalent of 5000 francs are made in US dollars; the equivalent of 3000 francs are made in Thai Baht.

Neon is the most affordable solution for users who match the frequent-user profile, with total costs of 34.85 francs. It is followed by Revolut (41.25 francs or 106.60 francs if transactions are made on weekends) and Wise (41.70 francs). Neon’s top rating for this profile owes itself to the fact that the Swiss app-based banking service stopped charging foreign transaction fees this year.

The most expensive payment card for the frequent-user profile are the standard credit card from Credit Suisse (561.30 francs of total costs) and UBS (454 francs). “The cost difference between the most affordable cards from app-based services and the most expensive conventional cards is more than 500 francs less per year for international spenders matching the frequent-user profile,” states moneyland.ch CEO Benjamin Manz.

Even Swiss no-annual-fee credit cards have costs exceeding 300 francs per year for this user profile, making them much more expensive to use than debit and prepaid cards from Neon, Revolut and Wise. Important: For POS purchases in Switzerland, on the other hand, Swiss no-annual-fee credit cards which reward you with cash back or points on spending are generally more favorable than cards from app-based providers.

The results are very similar for infrequent users with regards to POS transactions outside of Switzerland (you can request the detailed comparison at the foot of this report). Here too, Neon, Wise and Revolut are the most affordable. On the other hand, Zak – the app-based account from Bank Cler – has costs similar to those of most conventional Swiss banks.

Cost of cash withdrawals outside of Switzerland

moneyland.ch compared the cost of cash withdrawals outside of Switzerland based on a frequent-user and an infrequent-user profile. The comparison included cards from app-based service providers, Maestro debit cards from Swiss banks, and the PostFinance Card. Costs accounted for include currency exchange rates, foreign transaction fees, cash withdrawal fees and fee waivers. Monthly or annual card and private account fees are not accounted for.

The frequent-user profile assumes 5000 francs of cash withdrawals outside of Switzerland (2000 francs in euros; 2000 francs in Thai Baht; 1000 francs in US dollars). The infrequent-user profile assumes cash withdrawals of 1000 francs (500 francs in euros; 500 francs in British pounds). The detailed comparison is available at the foot of this article.

Revolut is the most affordable solution for the infrequent-user profile, with total costs of 8.30 francs on weekdays (13.40 francs on weekends). It is followed by Wise (8.50 francs), the PostFinance Private Account Plus (13.85 francs, not including possible monthly account fees). The most expensive cards for this profile are the Maestro debit cards from Credit Suisse (39.35 francs) and Raiffeisen (38.80 francs).

The rankings are different for the frequent-user profile because Revolut and Wise charge 2% cash withdrawal fees for withdrawals at ATMs in excess of 200 francs (Revolut) or 200 pounds (Wise) per month. The most affordable card for the frequent-user profile is the PostFinance Card linked to a Private Account Plus, with total costs of 75 francs. The PostFinance Private Account Plus has not foreign transaction fee for cash withdrawals outside of Switzerland – however, the Private Account Plus has a monthly fee (waived for certain customers). The second-most-affordable solution is Neon (95 francs), followed by Zak Plus (95.60 francs), Wise (108.05 francs) and finally Revolut (111.35 francs on weekdays, 147.30 francs on weekends).

The most expensive options for the frequent-user profile are Credit Suisse (236.35 francs) and UBS (233.30 francs). The difference in cash withdrawal costs between the cheapest and the most expensive solutions for cash withdrawals outside of Switzerland comes to more than 150 francs per year. “The cost difference between app-based services and conventional banks is not as large for cash withdrawals as it is for POS transactions,” observes Benjamin Manz.

Advantages and disadvantages of cards from app-based banking services

“The low fees and favorable currency exchange rates are the primary benefit of app-based solutions like Revolut, Wise (TransferWise) and Neon,” concludes Benjamin Manz. Another advantage of app-based financial service providers is that the linked apps typically include more features and are often more user-friendly than the apps offered by conventional banks and card issuers.

UK-based service providers Revolut and Wise do not provide a full alternative to a Swiss bank account because they do not give you a personal Swiss IBAN with which to receive local deposits (a Swiss salary, for example).

It is also worth noting that foreign financial service providers are not covered by the Swiss depositor protection scheme, even if they service residents of Switzerland. Customer service is also a key issue, and Revolut in particular does not have a strong reputation in this regard.

App-based banks primarily provide an affordable alternative to credit cards for international spending. Carrying a credit card when travelling in addition to an affordable card solution is still recommended because some merchants require actual credit cards (not debit cards or prepaid cards) for certain transactions – such as car rentals or hotel reservations.

Swiss vs. foreign app-based banking services

With Neon, Switzerland now has a local app-based banking solution with currency exchange rates and foreign transaction fees that can compete with Wise and Revolut. The app-based Zak account from Bank Cler is notably more expensive in this regard – with the low-cost international cash withdrawals with the paid Zak Plus account being an exception to this rule.

In terms of user friendliness, Neon and Zak have some catching up to do before they are on par with neobanking pioneers Revolut and Wise. A major advantage of Neon and Zak over foreign app-based services is that they provide actual, individual accounts at Swiss banks. Neon includes a private account at the Hypothekarbank Lenzburg and Zak provides a private account at Bank Cler. Account balances are covered by the Swiss depositor protection scheme up to 100,000 francs per customer and bank.

More on this topic:
You can find an overview of smartphone banks in Switzerland here
Independent Swiss credit card comparison

Comparison: If you would like to receive a detailed comparison of the costs of smartphones banks, simply enter your email address in this field and click on “Request free PDF”.

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Expert Benjamin Manz
Benjamin Manz is CEO of moneyland.ch and an independent expert on banking and finance.