Head to head
Digital bank or high street?
Free digital accounts beat high-street banks for most businesses. But there is a cash volume above which the monthly fee becomes the cheap option — and it is lower than people expect.
The short answer
Digital bank
£0 a month, free transfers, good tooling. For a business paid by transfer, a high-street account is money for nothing.
High street
A monthly fee plus per-£100 cash charges beats percentage fees once you are banking serious takings.
Side by side
| Digital | High street | |
|---|---|---|
| Monthly fee | £0 (Starling, Mettle, Monzo Lite) | Free for 12 months, then £6–£10 |
| Cash paid in | Percentage, or flat fee per deposit | Per £100, often cheaper at volume |
| Branch access | None | Yes |
| Cheque handling | Limited or none | Full |
| Overdraft | Starling only, among the free accounts | Standard |
| Lending relationship | Limited | Core offering |
| Account opening | Minutes to a day | One to three weeks |
| App quality | Excellent | Competent |
| Deposit protection | FSCS to £120,000 | FSCS to £120,000 |
Verify all figures against each provider's own pricing page before relying on them.
Work out your own crossover
Ignore the marketing on both sides and do this arithmetic instead.
Digital account cost = cash deposited × the percentage rate, or the number of deposits × the flat fee, whichever the provider charges. Everything else is usually free.
High-street cost = the monthly fee × 12, plus (cash deposited ÷ 100) × the per-£100 rate, plus any transaction charges above the free allowance.
Two worked examples, using illustrative rates:
A consultant, no cash
Digital: £0 a year. High street: roughly £102 a year in monthly fees alone, for branch access never used. Digital wins outright.
A café banking £2,500 a week
That is £130,000 a year in cash. At a digital account charging 0.7%, that is around £910 a year. At a high-street bank charging roughly £1.20 per £100, it is around £1,560 in cash charges plus about £102 in fees — so around £1,662.
Here the digital account still wins on paper. But look at Lloyds' machine rate of around £0.85 per £100 and the picture changes: about £1,105 in cash charges plus £102, or roughly £1,207 — still above the digital option, though much closer, and with a counter, cheque handling and a lending relationship included.
The things that are not on the tariff sheet
- Post Office capacity. Digital accounts route cash through the Post Office. If your local branch has long queues, restricted hours, or a deposit limit that is below your daily takings, the theoretical price is irrelevant.
- Security. Walking cash to a Post Office is a different risk from a night safe. For some businesses this alone settles it.
- Cheques. Construction, care and professional services are still paid by cheque more often than the market admits. Mettle takes none; Monzo takes none; Starling images up to a limit.
- Borrowing. Starling and Monzo both offer overdrafts, and Monzo lends up to £25,000 — but at rates priced for speed rather than value. For asset finance or a commercial mortgage, a high-street relationship built early is worth far more.
- Speed of opening. Digital: minutes to a day. High street: one to three weeks. If you need to trade next week, that decides it for you.
The answer most businesses land on
Use both. Open a free digital account for day-to-day banking, tooling and transfers, and hold a high-street account for cash deposits, cheques and the lending relationship. Neither is expensive to add, both are FSCS-protected, and you get the strengths of each.
This also gives you something more valuable than either: a working account if one is frozen for a compliance review. That happens more often than providers like to discuss, and having no fallback is how a routine review becomes a crisis.
Common questions
Are digital business accounts cheaper than high-street banks?
For businesses paid by bank transfer, substantially — several digital accounts are permanently free while high-street accounts charge a monthly fee after an introductory period. Once you handle significant cash, the gap narrows and can reverse depending on the tariffs involved.
At what cash volume should I use a high-street bank?
There is no single figure, because it depends on both tariffs and on how you deposit. Do the arithmetic with your own numbers. In practice the decision is usually driven by practical factors — Post Office capacity, security, cheques and lending — rather than by the price alone.
Are digital banks safe for business money?
Starling, Monzo and Mettle hold full UK banking licences and are FSCS-protected to £120,000, exactly like the high street. Be careful to distinguish those from e-money providers like ANNA and Wise, where money is safeguarded rather than statutorily protected.
Can I have both a digital and a high-street business account?
Yes, and many businesses do. It is the most practical answer for anyone who handles cash but wants good tooling, and it gives you a working account if one is restricted during a compliance review.
Do digital banks offer business overdrafts?
Starling and Monzo both do. Monzo offers sole traders up to £3,000 and limited companies £500 to £5,000, plus loans to £25,000, all decided in-app — but at a representative 39.0% EAR on sole trader overdrafts it is priced for speed rather than value. Mettle does not lend at all.