When the online banking service Simple got started, one of its promises to customers was that it would eliminate many of the excessive fees that traditional banks charge while also offering an improved and mobile-optimized banking experience. However, while Simple certainly did away with a number of the most common banking fees – like maintenance fees, overdraft fees, or minimum balance fees, for example – it still charged fees for other, lesser-used services. But the company announced this week that it’s ditching all fees.
Previously, Simple was still charging for things like over-the-counter cash withdrawals ($1 per transaction), international ATM cash withdrawals ($2), treasurer’s checks ($8 per check), inactivity ($5/mo) and card replacement fees ($2; or $16 if expedited). Although these are not the sort of fees that customers would have to pay regularly, they still contributed to the company’s bottom line.
Going forward, Simple says it will continue to generate revenue from interest and interchange fees – that is, it splits the interest margin with its partner banks and it splits the service fee merchants pay to the issuing bank. This is the same way it’s always made money, to be clear, but now it’s eating the cost of even more fees in an effort to improve the overall customer experience.
“This revenue model is a manifestation of our belief that you should have access to your money when you need it, without paying fees,” explains Simple co-founder and CEO Josh Reich. “Today’s elimination of all fees is one example of how we’re constantly working to remove any inconvenience our customers feel from using a branchless service,” he adds. “It’s also the right thing to do. You shouldn’t have to worry about how much it’s going to cost to access your money.”
To some extent, Simple is able to do this because it’s no longer operating as a startup in need of funding to stay alive – the company was acquired last year by financial services corporation BBVA for $117 million. At the time, Simple said it had over 100,000 customers. A later report revealed the number of active customers was lower, a leaked document stated. (Simple responded that the document was using placeholder numbers and was no longer accurate.)
Today, Simple tells us that it has “hundreds of thousands” of customers, but declined to offer a specific figure. The company also says it’s been seeing higher growth than ever and has an in industry low CPA (for personal retail checking accounts) by a significant margin.
We’ve also heard that Simple’s current growth rate is roughly on par with a bank that would have 5,600 branch employees, or 850 branches, though it has a team of just under 300.
By ditching its remaining fees, Simple may appeal to those who are fed up with their current bank and looking for a more affordable alternative.
That being said, though Simple customers may be saving on fees, they do miss out on some of the options bigger banks provide – like high-yield checking and savings accounts, for example. (Simple pays 0.01% in interest on customers’ funds.) That means at some point, a portion of Simple’s customers may consider other online banking options – perhaps opting for bank that does profit from overdraft fees in exchange for better interest rates, for example.
One word of caution: while Simple is eliminating all its fees, that doesn’t mean that you’ll never pay extra when you hit up the ATM. Like most banks, there are fees for using out-of-network ATMs and Simple won’t reimburse for those. Still, the company points out, its customers have access to more than 55,000 fee-free ATMs – twice the number of Chase and Bank of America combined.