Last week, the Berlin-based online bank account Number26 launched. According to the startup, it is Europe’s most modern checking account. While that may be the case for its iOS and android app, the plastic card that comes with it is not.
The idea is as brilliant as it is simple: instead of the usual offline bank account that needs to be activated to access it online, it operates only via app and website. The registration is super easy: instead of showing up at a bank or post office to show an ID and sign papers, this process is done with a few easy steps and a video call. The account and the MasterCard are for free, so is withdrawing money from any ATM worldwide. Its transaction system MoneyBeam allows you to transfer money via an email address or a phone number and works fast and uncomplicated. High five to product manager and the design team.
But then, there is one problem: The card that is neither debit nor credit
For now, Number26 is only available in Germany and Austria. This is important to mention as these countries, especially Germany, have a complicated relationship with electronic cash and credit cards. In late 2014, QUARTZ reported that only 18% of payments in Germany in 2013 were made by card. Germans love cash and a lot of shops rather take debit than credit cards (if they accept them at all) to save on transaction fees.
The problem with Number26’s card is that is neither a credit card nor a debit card but something in the middle – unfortunately it combines the worst of both.
A regular credit card bill as we know it is paid monthly. The Number26 card, however, works like a debit card: every time you use it, it charges your bank account right away. But because it is a MasterCard, it is only accepted where credit cards are welcome.
Also, Number26 MasterCard users cannot overdraw their accounts. Which, yes, may be appreciated in some cases. That is, however, not the original purpose of a credit card.
Number26 told VentureVillage that they are thinking about adding a debit card. It was also said, that many user reported to appreciate not being to able to overdraw their account.
While I fell for the app and its design right away and will use the card whenever my bank’s ATM is not around, the credit/debit card issue will make me use two other banks as well.
As card transaction fees will soon drop, people’s and shop owners’ relationships to electronic cash may change. Until then, Number26 is just another card in my wallet.