N26 (former: Number26) should be a revolutionary bank account, which is currently tested by a selected group of people, before the launch will take place in early 2015.
The Berlin start-up itself names its product „Europe´s most modern current account“.
The biggest difference to the established directs banks in Germany is the banking only using the smartphoneConditions of Number26
- free current account
- free MasterCard
- free cash withdrawals
Thus, the most common characteristics of a current account demanded by the German bank customers are met. Let’s have a look at the details:
Account on a credit basis
The current account is (for now) only available on a credit basis. This way, Number26 saves the investigation effort of the creditworthiness of the customer and reduces the risk of being harmed through a „loan default”.
At the same time, it has the advantage that this account will not be registered at the Schufa (credit investigation company). Since no credit check will be made, all people with problems with the Schufa have the best chances to get a modern bank account. The current account of Number26 can be described as „schufa-frei“.
Without a credit check, there is of course no credit line on the MasterCard. The card works very simple: just transfer money to your current account and spend it with the credit card.
Free cash withdrawals
At this point, Number26 even attacks the established German flagship internet bank DKB (3 million customers): customers of Number26 can withdraw cash worldwide from ATMs with the MasterCard – without foreign withdraw fees or exchange fees!
With these conditions, Number26 is ideal as a second account from globetrotters to Jane Smith, who withdraws every Monday from the Sparkassen-ATM since 25 years … even after a change to Number26 the cash supply remains free of charge.
Is Number26 safe?
This question is justified when a start-up appears on the market with a new current account and offers everything for free … and even pays the foreign withdrawing fees for the customer.
Legal deposit insurance: Euros 100,000
The account balance is legally ensured by the German deposit insurance to Euros 100,000 through the partner bank on which the Banking app of Number26 is set up. Which partner bank this is, will officially be announced by Number26 in the beginning of 2015.
Banks earn mainly through the loan business. This is not possible for Number26, because it is a pure credit balance account. And because no charges are born by the customer, the only source of income will be the interchange fee that is paid by the merchant when using the MasterCard.
This fee for card payments of the type MasterCard is on average 2.75% of the invoice amount. The payment service provider (card terminal), MasterCard and Number26 are paid with it.
So if somebody pays Euros 1,000 a month with the MasterCard – without cash withdrawals from ATMs – the payees (i.e. the merchants, never the customers!) pay about Euros 27.50 fees. What amout of these fees Number26 will obtain, is a secret of the card industry and Number26.
The business model of Number26 will pay off as soon as a large number of customers is obtained, who pay a lot cashless with the card and as rarely as possible draw cash from an ATM.
Of course, Number26 will also earn through the account balance, because as a customer, one must deposit money to the account in order to use the account and the card. Therefore – as usual in current accounts – no interest is credited. Currently, this does not have an effect, because the general interest level is very low.
What will happen next?
On the website https://number26.de one can enter the e-mail address to be notified when the account officially launches.
We will accompany Number26 on our special portal. Also, because everyone who is proficient of the German or English language, can open the account. The place of residence or the nationality of the customer does not matter. This is unofficially a difference to the established banks!