Viola Black: Is it really a rival to Monzo?

A new smartphone-based account called Viola Black has launched, pitching itself as an alternative to the hugely popular Monzo. But how do its features stack up?

Viola Black arrived at the beginning of 2019 with a punchy marketing slogan, currently displayed across the London Underground, stating: 'Move over Monzo. Download Viola Black: the new modern money management tool.'

But this new service joins an increasingly crowded market, with a growing number of mobile-only 'challenger banks' arriving in recent years looking to disrupt the traditional bank account market.

Read on to find out how Viola Black fares against its competitors, and whether or not it truly is a rival to the likes of Monzo, Starling Bank and Revolut.

What does a Viola Black account offer?

Viola Black has pitched itself as an alternative to Monzo, but the two are very different in reality. Monzo is a bank account, while Viola Black is a prepaid card.This means you can only spend money you have already loaded onto your card.

This puts Viola Black's offerings more in line with prepaid cards like Revolut, even if the brand's current marketing campaign sets Monzo in its sights. Monzo launched as a prepaid card before converting customers to a full bank account in April 2018.

Viola Black is rolling out slowly, and anyone who signs up will be placed on a waiting list. Because of this, Which? has not yet tried the app.

Joining the Viola Black waiting list does not cost money, but since it has not announced a timeline for when the service will be widely available, it's best to treat the product as a potential future prospect, rather than something you could start using today.

Account basics

Once your Viola Black account is up and running, you're given an account number, a sort code, and a prepaid Mastercard debit card which you can top up via the accompanying app.

The app will also allow users to make payments, view breakdowns of their spending and set category-specific budgets.

Safety features

Viola Black customers will be able instantly lock their cards from the app. Since the card does not link to a bank account, victims of fraud can only lose the balance they have loaded onto the card. This is the case with all similar prepaid cards.

Overseas card spending

You can make card payments abroad without any fees, and Viola Black allows you to store multiple currencies on your account.

Standing orders, direct debits and overdrafts

Viola Black does not offer users a current account. This means you won't be able to set up direct debits or standing orders, nor will your account be able to receive salary payments - all features that Monzo, Starling and latest entrant N26 allow you to do.

Overdrafts aren't available either, though Viola Black considers this part of its promise to offer 'complete control of the money that is available to you' without borrowing.

Fees

A key difference between Viola Black and Monzo is the new challenger's fees.

The minimum fee for Viola Black members is £4 a month. The extensive list of payable fees also includes £2.90 for sterling ATM withdrawals, a £2 'inactivity fee' if a card goes unused for 120 days, and a £2 fee for foreign ATM withdrawals plus 1.5% of the withdrawal amount.

For Monzo users intrigued by Viola Black's ad, these fees may come as a shock. But Viola insists that its service is worth this premium.

• Find out more:Prepaid cards explained

Is my money safe with Viola Black?

Though it is authorised by the Financial Conduct Authority (FCA), Viola Black deposits are not protected by the Financial Services Compensation Scheme (FSCS) - the independent body that acts as a safety net for customers if a financial company goes bust.

Viola claims its customers don't need FSCS protection since it is not a bank. Instead, customers' money is held in ring-fenced, segregated bank accounts which will always belong to customers even if Viola goes into insolvency.

While this arrangement is not unusual for other prepaid cards, all UK banks, even challenger and mobile banks like Monzo and Starling, protect up to £85,000 of account funds under the FSCS.

• Find out more:All you need to know about the FSCS

Viola Black vs Monzo vs Starling Bank

Viola chairman Christopher Hamilton told Which? Money he considers the account's target audience to be 'everybody' and the brand's competition to be 'any bank'. But comparing Viola Black to popular mobile banks creates a stark contrast.

Currently, the mobile banking market is dominated by two major players: Monzo and Starling Bank, neither of which charge monthly fees.

Monzo

With more than one million customers, Monzo has grown into one of the most successful UK startups in the finance sector.

Some 15% of all new UK bank accounts are Monzo accounts, and Monzo became a Which? Recommended Provider in our latest banking survey, with the highest consumer score of any UK bank.

Monzo customers can open full current accounts, allowing them to pay in their salaries, set up direct debits and spend into their overdrafts. The Monzo app also provides spending analytics and allows users to freeze their cards if lost or stolen.

Starling Bank

More than 400,000 people have opened Starling Bank accounts, which offers many similar features to Monzo, including spending analysis and the ability to freeze your card.

Starling pays interest on current account balances - a unique feature among branchless banks. Customers can expect 0.5% AER on balances up to £2,000, and 0.25% AER on anything between £2,001 and £85,000.

As with Monzo, Starling Bank customers have FSCS protection, the ability to set up standing orders and direct debits, and the ability to receive salaries. Starling Bank also allows customers to deposit cash in post offices.

Both allow fee-free card spending overseas. Monzo places a £200 monthly limit on foreign ATM withdrawals - above that amount it charges 3%.

Viola Black vs Revolut

The most similar products to Viola Black on the market are other prepaid cards and its closest competitor is app-based Revolut.

Revolut is astand-out sterling prepaid card, offering market-leading exchange rates and no fees for overseas spending. It is managed via a smartphone app, and you will need to download the app before you can get the card.

Once you have aRevolut account, you can transfer money to it via your debit card, Apple Pay (if you have an iPhone) or bank transfer.It offersfee-free foreign spending and overseas cash withdrawals, butwithdrawals of more than £200 a month are charged at 2% per withdrawal.

Find out more in our review of Revolut.

Should you swap your Monzo for Viola Black?

Despite Viola Black's marketing, prepaid cards are not really an alternative to a bank account. Monzo and this new product are quite different beasts.

If the ability to spend abroad fee-free is the appeal, Viola Black could be worth considering alongside other similar prepaid cards although it has some way to go to match the well-developed features of Revolut. Starling Bank's debit card, which allows fee-free spending and unlimited ATM withdrawals, could also be more attractive.

When choosing a prepaid card, pay close attention to any fees you may be charged. If you plan to use one for money management, you'll start getting hit if you make ATM withdrawals or you don't use it regularly.