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Are Bank Alternatives | Missing a trick ?| Are they as cost effective as you think?

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Are Alternative banks failing to deliver what the small business owner really needs?

As we continue our article series on alternative banks after discussing foreign exchange accounts today we are going to start with our first alternative in the business banking sector.

In this article I will be taking an in depth review as a small business owner of the new bank’ Tide’

Noteworthy, if you feel you could not do without a traditional debit card. I can already tell you this is not a bank alternative that you should consider.

So let’s get started, first of all I have a business bank account with Lloyds. Therefore, I personally understand the costs associated with running a business bank account.

So I am just like all of my readers, I am always try to review anything which is new and could potentially provide  a better business solution.

In this discussion I will focus on the costs associated with the Tide account as I want you to fully understand the numbers before making any decisions.

However, let me first introduce you to some of the great things I think ‘Tide’ has to offer.

alternative bank Tide review
alternative bank Tide review

There are 3 main areas which Tide actively promote

  • Cheap – no monthly or annual fees
  • Free transfers – If you work with fellow Tide account members its free to make transactions with each other.
  • Quick – accounts can be opened within 5 minutes online from the comfort of your own home or office.

Small Business Owners Want Something Better!

Over the last few years since the banking crisis we have all noticed an influx of alternative business bank accounts. Noteworthy, most of them are  popping up online and starting to grow in  popularity.

This could be due to a number of reasons from business owners like wanting to :

  • Save on fees
  • Leave major banks
  • Open an account after suffering a knock on your credit score
  • Set up an account quickly

The second alternative bank in this series I want to introduce you to is Tide – the first UK based mobile bank targeted at small business owners.

The idea behind the bank is to utilise technology through pre-payment technology to win new customers by capitalising on where the big banks are failing.

The company aims to not only make its pricing transparent but low cost. Its fee structure consisting of:

  • No monthly or annual fees
  • Free card usage, at home and abroad, please note however the card is a pre-payment card and is not accepted by all merchants. In some cases, it’s been identified as  a credit card by some merchants and incurred charges. 
  • Free transfers only to Tide members
  • Transfers to non-Tide members 20p
  • Cash withdrawals £1 per ATM withdrawal
  • Cash deposits £1 at the Post Office, 3% at Pay Point

If you would like to open a Tide account, please take advantage of my readers offer. However, I would encourage you to check out my cost calculations before opening an account.

Tide bank account offer

Tide Exclusive Offer

What's the real cost?

If you are a small business owner like me ‘Tide’ could be the perfect cost effective solution.

It says its quick to open an account and now that my business is growing it could save me hundreds of pounds in fees and monthly charges! Right!

Well before we get excited I want to do the numbers. Currently as I have already said I bank with Lloyds  business bank account. Just like many business owners after enjoying my two years of free banking I now have to pay monthly fees.

My fees consist of a monthly set fee of £6.50 which totals a whopping £78.00 a year. After trading five years this will have cost me £390.00.

My cash payments are charged at £1.00 per £100 deposited. So for £1,000 per week over 52 weeks, the cost is £520.00 for the year. A total of £2,600 after five years

I still have clients that pay by cheque and I am charged  65p for each check deposited. So 35 cheques a week total £22.75 in fees. Over 52 weeks this is a total of £1183.00, which is £5915.00 over the next five years.

Internet Banking debits and credits are free of charge.

So to make this easier and so you can get an understanding of the true coats I have put this small table together.

Lloyds Costings

CPW – Cost per week CPM – Cost per month CP1Y – Cost per 1 year – CP5y – Cost per 5 year

ServiceUnit CostQuantityCPWCPMCP1YCP5Y
Monthly Fee6.501 6.5078.00398.00
Internet banking 0400000

So my question is if I switched to Tide what would be the cost comparison?

The first thing is there would be no monthly fee of £6.50 to pay so I would automatically save £78.00 in the first 12 months.

The cost of cash deposits is the same at £1.00 per £100 deposited.

Noteworthy, Tide do not accept cheques, so I would have to get clients to pay by bacs transfer so let’s use the transfer fee which would be 20p unless they where a Tide customer. However, I think this would be unlikely.

First of all, transfers are charged at 20p each so for 35 transfers is will be £7.00 a week over 52 weeks it will cost £364.00 a year. Totalling £1820.00 for 5 years.

40 internet banking debits would be classed as Transfers and charged at 20p each. So £8.00 per month will be £96.00 per year. This would cost £480.00 over the next 5 years.

Tide Costings 

CPW – Cost per week CPM – Cost per month CP1Y – Cost per 1 year – CP5y – Cost per 5 year

ServiceUnit costQuantityCPWCPMCP1YCP5Y
Monthly fee0 0000
cheques/ Transfers0.20357.0030.33364.001820.00
Internet banking / transfers0.2040 8.0096.00480.00

Here is a quick comparison table for total costs for 1 and 5 years .

ServiceLloyds 1 yearLloyds 5 YearsTide 1 YearTide 5 Year
Monthly fee78.00398.0000
Cheque/ Transfer1183.005915.00364.001820.00
Internet banking / transfers0096.00480.00

Looking Good!

Well I am sorry to disappoint, but I would not start jumping off your chair just yet! Do you remember when I told you that Tide do not accept cheques and I would have to convert them over to transfers! Well if I do the same at Lloyds what do you think the figures would look like?

ServiceLloyds 1 yearLloyds 5 yearsTide 1 yearTide 5 years
Monthly fee78.00398.0000
Cheque/ internet banking/ transfer00364.001820.00
Internet banking / transfers0096.00480.00


Well my friends the numbers never lie! 

Review Result

After doing this exercise I will be sticking with Lloyds and just getting the clients to stop paying by cheque.

After completing this exercise I personally still feel there is  a need for a new alternative bank.

However, for me Tide needs to provide a cost-effective solution that improves on the current service being offered by a leading high street brand.

Areas of importance include:

  • Cheap – the use of pre-payment technology should not only increase speed but reduce the infrastructure costs. Thus, passing on significant savings to the small business owner.
  • Give – reasons enough to make business owners want to change. Services need to surpass what is already being provided by high street brands.
  • Headlines – need to be supported by clear cost comparisons. This will ensure the customer makes the right business decision.
  • Transparent – clearly state that they are not a bank, while outlining the back-office processes.

One thing I can say positively about Tide is that they provide and open forum on their website. This clearly shows the frustration that is being felt by existing customers. I suggest you check it out by clicking on this link.