Is free business banking a reality?

While free personal banking in the UK has become quite achievable thanks to the growing number of challenger banks and the stiff competition they create for each other, free business banking is still lagging behind.

But free business banking is, slowly, becoming a reality and small businesses and sole traders can now easily find alternative solutions to save on fees.

Traditional bank fees from high-street banks

High-street banks have long held a monopoly on business banking for SMEs and sole traders, and although a shift has started to take place with the growth of online-only challenger banks and e-money institutions, we're still a long way away from a fully free business bank account.

The latest figures from the Association of Corporate Treasurers have the so-called 'Big Four' banks (Barclays, HSBC, Lloyds and RBS) sharing 80% of business accounts in the UK. These figures even show that 60% of business account holders also have a personal account with the same bank.

By not shopping around for a better deal and remaining loyal to the high-street banks for both personal and business banking, small businesses and sole traders are paying unnecessary banking fees and missing out on potential free business banking.

What is a business bank account charge?

A business bank account charge is any cost the bank decides to charge you for your business account. Bank fees range from up-front admin costs and monthly fees to transaction fees on operations. Bank fees and charges are not always obvious, and can sometimes be hidden in the fine print or carefully disguised behind the words 'free business account'.

Most high-street banks in the UK have introductory offers for small business accounts that are largely free, as long as you stick to a specific set of limits, such as not receiving too many payments or too much money. So yes, technically a free business account with a high-street bank is possible, but it will always be limited.

Typical bank account charges in the UK

With the recent rise of challenger banks, bank charges have evolved, but not always favourably for the consumer. You used to pay for an account, the transactions you make, and some other charges such as using your card abroad on a business trip. Now you can also be charged for the convenience of internet banking, access to a smartphone app, and more.

Banks have even changed their offers to include different tiers of service. This is most often how they can afford to include a free business bank account, by cutting their products up into three or four chunks, each available at a different price point.

Here are some of the typical business bank charges that you can expect, which most often carry limitations or extra charges:

• Sending and receiving bank transfers

• Using an overdraft

• Cashing cheques or making a cash deposit

• Paying by cheque or requesting a cheque book

• Foreign currency bank transfers

• Faster Payments (a system of near-instant processing times)

• Receiving international payments

Online-only and challenger banks: a step in the right direction

Challenger banks managed to shake things up a bit, taking some business away from the high-street banks and creating new offers that focus on self-service and convenience for SMEs. Their pricing made high-street banks review their offers and generally pulled business banking fees down, which was a great achievement. And although you can find totally free business accounts with challenger banks, there are still some limits on things like withdrawals and cash deposits.

So what do challenger banks charge for?

The new generation of predominantly online-only banks build their business account offer around a free account. They charge for some transactions that usually require partners, such as cash deposit fees or ATM withdrawal fees over a free allowance, but the majority of key business banking services remain free.

Where they make their money is on add-ons - handy additional features that provide extra efficiency or convenience to the customer. So challenger banks have transposed bank charges from traditional banking operations to “business add-ons”.

These new bank charges allow challenger banks to offer a completely free business bank account to their customers, while building complementary services they can charge for. 

Get the most out of your business account with additional features

Small businesses need flexibility. Each day has different challenges, each challenge needs a different tool. By choosing a business account that is part of a rich ecosystem of complementary tools and services, you can get the most out of your business account and grow your business at a faster pace without spending more time on tedious admin tasks. In fact, saving time and streamlining your business admin is why it is highly recommended to go with a business account, even as a sole trader. There is nothing worse than trying to separate personal and business expenses for HMRC at the end of the year.

SumUp has designed an ecosystem around a free business account that seamlessly integrates other solutions such as the industry leading SumUp Air and SumUp Solo card readers. By pairing the two together, you not only access a free account, but all payments you process via SumUp automatically land in your account the next day - skipping the bank to get you your money faster.

Free business banking is possible without a bank

While not a bank, SumUp's UK business current account gives you unlimited access to:

• Free money management with simple digital sign-up that takes minutes

• No monthly fees

• Unlimited instant UK bank transfers - free of charge

• A free contactless Mastercard and instant access to Apple Pay and Google Pay

• Fee-free Direct Debits

• Seamless connectivity with the SumUp ecosystem

• 3 free ATM withdrawals a month, at any UK ATM

We only charge a small 2% fee on withdrawals that go over your free monthly allowance as well as on withdrawals abroad.

As a technology focused company, SumUp offers all of the above, and everything else in the ecosystem such as customer invoicing and ecommerce solutions, from the familiar comfort of your smartphone or other device.

After logging in to the app, you’ll be able to check your business account balance, send a payment to a supplier, and see the latest payments and transfers you've received almost simultaneously.