A major fintech payments leader with strong crypto ambitions in Europe isn’t afraid to sacrifice profitability for volume and stickiness.
Want to buy Bitcoin? Crypto trading fees run the gamut. PayPal and rival Cash App charge their tens of millions of users as much as 150 basis points (1.5%) fee plus unspecified spread to buy $1,000 worth of bitcoin. Coinbase, the largest crypto exchange by assets, charged its tens of millions of users an average of 143 basis points in transaction fee and spread and generated $1.35 billion in retail trading revenue for Q4 2024. By contrast traditional securities broker Robinhood charges no fee or commission at all.
London-based Revolut, a European-focused financial services firm with a valuation of $45 billion and 9 million crypto users, is breaking ranks with the high-fee peer group. Up until last year, most of its global crypto users paid platform fees of 49 to 149 basis points plus a spread of about 100 basis points. Starting Tuesday Mar 25, it launched a dedicated crypto app for its Revolut X crypto exchange across the UK and Europe, charging zero spread and a low 9 basis point fee to price takers. Unlike a limited token offer by traditional financial peers, Revolut offers more than 220 tokens with a total of 400+ pairs denominated in three major fiat –US dollar, euros, and sterling.
The most recent Forbes-calculated weighted cost of buying bitcoin industry wide is actually 80 basis points. On the less expensive side of the equation, firms like Robinhood charge no fee but don’t disclose average spreads, while OKX and Binance have a base fee of 10 basis points plus 20bp in spreads.
Revolut’s high priced strategy, which is apparently being fazed out, operates within the company’s super app that lets users spend, send, and invest their money – banking services are already available in parts of Europe where the company is accumulating licenses in payments, investing, and banking to support its broader financial services aspirations. So it’s unusual that with so much riding on the convenience of a single financial app that does it all, Revolut finds it strategically important to have a specialized app for one particular product (crypto), that at the same time disrupts its existing high-fee model. Revolut published record profits of $545m from $2.2 billion in gross income from 2023 commissions.
Capturing crypto liquidity is becoming a top priority for Revolut’s wider ecosystem, and this can only happen if the firm can achieve a critical number of active crypto buyers and sellers. The company told Forbes that “the average active Revolut X customer trades 10x more when compared with the average active Revolut retail customer.”
Although the firm’s new pricing strategy will aim to take market share from all, there is one European competitor in particular, Binance, that has the most to lose. To a lesser extent Coinbase, Kraken, and Bitstamp (now owned by Robinhood) – all with significant European market share – will also see stiffer competition. Binance, which has virtually no presence in the large and lucrative US market, claims to have more than 250 million users worldwide. It is widely known in capital markets and crypto that 8% to 9% of registered users typically become active clients. If that holds true for Binance, its actual number of active users is probably around 20 million, with many residing in places like Brazil, India, and Argentina where average account sizes are a fraction of what they are in Europe. Europe is the most important market for Binance from a client wealth perspective but it is costly from a regulatory perspective. Revolut’s current pricing strategy is lower than Binance in Europe, its regulatory licensing is comparable, but Revolut’s reputation with regulators is better.
Attempting to expand beyond Europe, Revolut is already courting Gen Z and Gen Y users in the United States with its offering in payments, currency exchange, zero-fee investing, and savings. Its US banking services come through partnerships with Ohio-based Sutton Bank and New Jersey’s Cross River Bank.
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