About Coconut Bank
Coconut's biggest distinguishing characteristic is that it strives to simplify your taxes and spending.
Under the Payment Services Regulations 2017, Coconut is registered as an Account Information Service Provider with the Financial Conduct Authority (FCA) (reference 931194).
Coconut offers a business current account to some customers, however it is not a bank. Prepay Solutions (PPS), a business name of Prepay Technologies Ltd, which is an electronic money institution registered by the FCA under the Electronic Money Regulations 2011 (reference 900010) for the issuing of electronic money, offers the Coconut current account.
PPS keeps all funds in a secure account in compliance with the Electronic Money Regulations of 2011, which protects clients in the event that Coconut or PPS goes bankrupt. PPS also issues the Coconut Mastercard, which is issued under a Mastercard International license.
Can I use Coconut Bank for international bank transfers?
No. Coconut does not presently have an IBAN/BIC/SWIFT for making and receiving international payments. However it can provide you with a couple of alternatives:
Connect your Coconut account to another bank account. In a few simple steps, you can move the funds to a domestic account with an IBAN and connect it to your Coconut app.
Coconut partnered with Wise because it provides excellent exchange rates. The majority of its consumers have discovered that this is the best answer for them and their company. Here's a link to help you get started. You can contact the team via the in-app chat or via email if you have any issues or need assistance.
How long do transfers take with Coconut Bank?
Wise, in collaboration with Coconut, considers the following four parameters when determining the speed of your TransferWise transfer:
Payment Method - Wise shows us the time estimation based on our selected payment method. Bank transfers take a few days to complete, while card transfers are usually clear instantly. We look at the fastest and the slowest transfer options for each option.
Time of the Transaction - Wise can only proceed with a transaction if it takes place during regular bank business hours. Other time-related issues to consider include a national holiday on that particular day. Overall, when it comes to transfer speed, timing is crucial.
Country Combination - The country combination Wise uses is one of the primary elements that affects transfer speed. Each country and currency combination is unique, and currency conversion might take up to two days.
Security Procedures - Wise is unrivaled when it comes to security. When completing a transaction, it is frequently requested to verify its identification, address, and even where it obtained the funds. These safety processes ensure that its money is safeguarded, despite the fact that they may appear boring to others. Such inspections, on the other hand, can typically lengthen the time it takes to complete a transfer.
Are there transfer limits?
Banks and money transfer providers, in most circumstances, have their own upper limits, which can vary greatly depending on the type of the transfer. Your bank may impose a daily transfer restriction of $5,000 — or no limit at all.
If you're sending money from another nation to the United States, Wise has a $1 million transfer restriction. The amount of money you can send out of the United States depends on how you pay for it and which state you live in.
Can I use a Coconut Bank debit card when traveling abroad?
Yes. Your Coconut debit card can be used to withdraw cash from any UK ATM and most international ATMs. You should be informed that cash withdrawals are subject to a £1 fee. Your Coconut account has a daily cash withdrawal limit of £500.
Coconut Bank Exchange rates and fees
Coconut comes with a number of fees, the amount of which is determined by the quality of service you choose. The basic Start account is free to sign up for and does not require a monthly fee. The monthly fee for the Grow account is £5.
Those with a free account will be charged extra fees. A 2% fee is applied to foreign currency transaction, and a replacement Mastercard costs £4 each time. Both of these are free on the Grow account. You'll be charged £1 per withdrawal regardless of whatever option you choose.
Coconut claims that its free accounts are "best suited for side businesses or if you're just starting out," while their paid accounts provide "banking and accounting for your full-time business." However, the free account may not be ideal for everyone due to the fees, monthly invoice limit, and lack of tax report.
Exchange rate
To figure out how much your money is worth in another currency, Coconut uses the Mastercard Exchange Rate.
To help pay these costs and maintain a long-term sustainable service, there may be a fixed 3% fee for purchases made using foreign cards.
Transfer fees
Coconut's partner, Wise, has no hidden fees and declares all of their costs up front: 1% for USD transfers from the United States. For most other transfers, it's 0.5 percent. For some currencies, it is 1%.
Additional costs
Coconut's monthly price options include all charges paid to them. Unless the client engages in overseas transactions through Wise, they do not disclose any additional expenses outside of their monthly plans.
How does Coconut Bank transfer fees compare to using a money transfer provider?
You may need to make and receive international payments to allow your firm to develop, whether you're a business owner working with international suppliers or a freelancer taking work from international clients.
Unfortunately, with a Coconut account, this is not feasible, though there are plans to bring this functionality online in the future. If you need to send or receive foreign payments, you might want to look into a solution like the Wise borderless business account. It's even something Coconut recommends.
Coconut Bank pros and cons
Pros
Cons
Coconut Bank Additional Products
Coconut started its Beta program in January 2018 and has been steadily adding features since then. Currently, only their ‘Start' current accounts are available, while the impending Grow accounts, according to the Coconut webpage, will be available ‘soon.'
Summary
Coconut is a solid digital-only offering that is well-suited to self-employed individuals who manage small firms or are sole traders. The software makes it simple to use all of its services, and the invoicing tool and tax computation feature are particularly appealing. Although the basic account is free to open and use (save for a £1 ATM fee), you may find that you require the premium version for the full range of services, or that you prefer a traditional banking account if you have more complex business banking needs.
It's fantastic to see businesses like Coconut offering financial products tailored to freelancers. You need every edge you can get when you're initially starting out. It's hard not to be enticed by the prospect of having an app handle your taxes at the end of the fiscal year.
Coconut's Start account appears to be helpful for folks who are starting a side business or figuring out what it means to be a sole trader. Some of the costs detract from this, but they aren't excessive, and they don't apply to everything. For £5, the Grow account appears to be a good deal for people who have started their own company.
