Revolut, the UK bank challenger that is storming the U.S., is getting into the online trading business, launching a commission-free trading platform.
Earlier in August, Revolut announced in a blog post that Revolut Metal customers can make up to 100 commission-free stock trades each month and will have access to real-time price and performance data. Revolut said it plans to roll the service out to its Standard and Premium customers in the coming weeks.
Revolut customers who use the service will have access to more than 300 U.S. stocks listed on the New York Stock Exchange and Nasdaq. Any trades after 100 will face a £1 per trade. There is a 0.01 percent annual custody fee and zero in terms of account minimums. During its beta period, the commission and annual custody fees will be waived.
Revolut is trying to stand out from the other digital trading services that already offer commission-free trading by giving customers the ability to purchase fractional shares. By doing that, it opens its services up to more people who may not be able to afford say one share of Apple let alone several shares.
“Often, investors are required to buy a minimum of one share in a company. That’s not a problem if the cost of a single share is low (pence/cents each, for example), buy shares in many popular companies such as Amazon, Google, or Microsoft, can cost a thousand dollars each, or more,” wrote Andre Mohamed, head of wealth and trading at Revolut in the recent blog post. “With fractional shares, you can buy a fraction of a single share for as little as $1USD, which means you’ll still own a piece of the company, albeit a much smaller one.” Revolut placed a $1,000 maximum per order and will keep the trading open the same hours of the U.S. stock market.
Revolut is taking on the likes of Robinhood and Acorns with its new online trading platform. Financial technology startups have been leveling the playing field for the masses and online trading is an area they have been thriving in. Last year Robinhood surpassed E*Trade, the discount brokerage firm in terms of customers. Acorns has been growing rapidly with 4.5 million users as of January. In an interview with CNBC, Mohamed dismissed the comparison, arguing that Revoult is able to offer more services than Robinhood. “We have the ecosystem, it’s not really a fair comparison. We’re just going to offer so much more than they can. It’s a different demographic as well. And from a pricing perspective, this is very much a freemium model, driving subscriptions,” he said.