The news: Revolut is updating its paid accounts with new purchase protection and insurance benefits, according to a press release sent to Insider Intelligence. Here are the details:
The bigger picture: The neobank has introduced these new features while also increasing its focus on paid account subscriptions. In December 2020, Revolut launched a mid-tier account to accompany its existing Metal and Premium products. More recently, Revolut announced new fees and restrictions on its free Standard account in Ireland—which could be part of a bigger strategy to push users toward paid accounts. Revenue from the challenger’s paid subscriptions represents more than one-third of its mix—up from 23.79% in 2019.
The big takeaway: Increasing the appeal of its paid offering could help Revolut build a stickier business model and boost its profitability.
Even before the pandemic, the neobank’s losses were ballooning. Recent results don’t look any more promising—its annual loss soared by 92.98% to £206 million ($264.21 million) in 2020.
Paid accounts benefit Revolut in two ways: 1) They enable the neobank to rely less on interchange fees associated with customer card usage; and 2) they provide a steadier income stream as more appealing offerings attract and retain more customers. As premium subscribers become a larger piece of the pie, profitability will be more attainable—and Revolut’s new insurance and purchase protection offerings will further this goal.