In our quest to find the best business bank account alternative we’ve looked at Cashplus, CardOneBanking, and Acorn, but now there’s a new account on the scene courtesy of fintech startup, Tide. Originally this article was an overview of the account highlighting the features and benefits of account at launch. As I’ve tested the account over the years, it has no morphed into a full review of the Tide Business bank account.
What is Tide?
Tide is an alternative ‘bank’ account aimed at small businesses, freelancers, and independents. Think sole traders and small limited companies.
I used to refer to these accounts as being card-based due to the way they work, but in the case of Tide, mobile first, or app-based might be more correct.
In true digital challenger style, the Tide account is based around a smartphone app. And while other popular alternative business accounts also enjoy banking apps they aren’t necessarily as central their proposition.
In Tide’s case, the app is everything. It is the account. You won’t find any traditional online banking though there is an online portal, costly customer service numbers, or frustrating login procedures. The account is run and managed within the app. It offers a web portal, but you’ll need to app to log in. Customer service also comes via the app, though you can of course email too if needed.
How does Tide work?
The beauty of the Tide account is in it’s simplicity. Basically just sign up to Tide here and follow the on screen prompts. The application process takes less than 5 minutes, and all being well you’ll have your sort code and account number sent to you a few minutes later.
In my initial testing there was a slight issue verifying the ID I used, but I still had the account details within a couple of hours, while the Mastercard came within three working days.
Payments to and from the account can be made immediately, but direct debits can take a few days to setup. Unlike some other digital business accounts, there are no split pools. The money in your account, is in your account. There’s no need to split funds between the account and the card, they are one and the same.
Note: It seems that Tide has rejected some applications from sole traders that have not pre-resgistered with HMRC. Tax rules state that you only need to register within 3 months of starting to trade, but Tide may require this registration before you apply for an account.
How much does a Tide account cost?
Here’s the real boon. The standard Tide account costs just 20p per transaction. That’s it. Well almost it. There’s a £1 ATM fee, but that’s all. No monthly cover charges, no hidden fees, just 20p per transaction, and not even on all transactions. If you can receive payments via BACS rather than Faster Payments, then there’s no fee at all.
In addition to the free account Tide also offers three paid accounts Plus, Pro, and Cashback. Tide Plus costs £9.99 and waives the 20p transaction fee for the first 20 transactions, as well as adding priority support, telephone support, and a 24/7 legal helpline.
Tide Pro is £18.99 a month and is really aimed that business making a high number of individual transactions. In addition to the benefits Plus, Pro offers unlimited transactions i.e. no 20p fee, and an additional expense card.
Tide Cashback is £49.99 a month and is really aimed are larger businesses. It includes three expense cards, 150 free transactions, plus 0.5% cashback on spending.
Most businesses especially side hustles and start ups will be sufficient in the beginning then as the business grows, so too can the account.
What can you do?
You can use the account like you would any standard bank account to make and receive electronic payments, to setup direct debits, and standing orders, to make card payments, and to transfer money.
Additionally, you can also send and manage invoices directly from the app, and use the card abroad at point of sale, or online, without incurring any foreign exchange fees. For the ultra tech savvy, Tide also has an API for hooking up your account data to external services. Integration with accounting favourite Xero is available right out for the box, FreeAgent integration was implemented in March 2018 which is a great for micro businesses and sole traders that use it send in their tax returns.
One real boon for Tide compared to some other digital challengers is that although Tide offers full FCSA protection for deposits up to £85,000 via it’s partnership with Clearbank.
Like many digital banks and challengers, Tide customers can now pay in cash at Post Office branches, or at PayPoints around the UK. There is a small charge this though of 0.5% when paid in a the former, and 3% when paid in at the latter.
What can’t you do?
Whilst you can now pay in cash over the counter, you can’t receive cheques, nor can you make international payments. And while I loved the app, it is the sole means of accessing and administering the account. That won’t suit everyone, particularly those used to more comprehensive online banking platforms. There is a web-based portal that features the same functionality as the app, but you need the app to access it.
Unfortunately, if you lose or damage your phone, you are stuck. You can email Tide, to get your account frozen and your card cancelled, but you’re locked out of the app and thus your business fiancees until you get a another smartphone. Compare that with other accounts, that offer full online and telephone banking services that can be used in lieu of the app.
- Instant sign-up (roughly 3 minutes)
- Low cost
- No credit checks
- Pay in cash at the Post Office or PayPoint
- No foreign exchange fees, commission, or loading
- Fast customer support (paid accounts)
- Integration with Xero and FreeAgent
- Full FCSA deposit protection
- Works with iZettle, Paypal, Stripe, GoCardless etc…
- Limited international payments (no IBAN)
- Totally app based (great for those who live on their mobile, but perhaps not so good for others)
- Cannot accept cheques (yes, some companies still use them)
- No account access if you lose your phone
- Faster Payments are still slow
Who is a Tide bank account for?
Many traditional banks focus on traditional businesses. Those that take cash, send cheques, have a fixed premises, etc.. Tide also covers these businesses but in my opinion is more aimed at the online micro-entrepreneur and micro business crowd with it’s quick account setup and suite of online tools it will cover almost all small business needs, but offers a low cost of entry to those trying out new ideas or going it alone for the first time.
In short a Tide business account is for:
- Self employed
- Online stores
- Independent traders etc…
Who a Tide account isn’t for?
Whilst I’ve said above that Tide can cover almost all businesses. In my opinion it might not be a great fit for those relying on Cash. Cash can be paid in over the counter at Paypoints or Post Offices, but those that need to withdraw cash from ATMs on a regular basis will face a £1 for each withdrawal. As such I can’t recommend it for that purpose.
Tide Credit builder
The credit builder is aimed at new companies, or those starting to do business in the UK that may not have had credit before and need to improve their credit history. In some industries this is important as suppliers may offer more favourable credit terms when dealing with businesses with a good history. Or demand payment up front form businesses without.
Tide credit builder helps improve your businesses creditworthiness by offering a structured loan of £240 repayable over 12 months. This is reported to credit referencing agencies (Experian) to help boost your businesses credit score. At the end of the 12 month period the loan is cleared and you get your £240 in repayments back. Tide keeps the interest which is set at 24%. This might seem steep for 12 month loan, but you are effectively paying that £33 for the service, so actually represents decent value. What’s more, loan interest is an allowable expense for tax purposes.
Our verdict – It’s a no-brainer (well, almost)
The Tide account is a welcome alternative to traditional business bank accounts, and even to the usual card based alternatives. It’s the closet to basic business bank account I’ve found, but it’s not for everyone.
It’s simplicity and ease of use, makes it perfect for micro businesses that need a basic account and need it quickly, while the lack of credit checks, and ease of application make it a great proposition for those with a poor credit history. Typically, such users would struggle open a traditional business bank account, and instead turn to the likes of CashPlus or Card One Money. See our article on the top business accounts with no credit check for more on that.
That being said, the account does have some limitations. Although you can now pay in cash, cash-handling businesses (which truth be told are becoming rare), might still prefer a more traditional account, such as a Santander business account.
Similarly, not being able to accept international payments, or cheques (despite the partnership with ClearBank), could also present a problem. Cheques especially, seem to have comeback from the dead since rule changes in 2018 mean that they should clear within a day.
Managing the account solely via an app might put off some, but could be seen as a plus for others. It means quick customer service, and removes the pain of dealing with call centres when replacing cards, or dealing with account issues.
This area of the fintech industry is beginning to get crowded as more challenger banks open up for business, and traditional banks start lifting their game. But, with it’s unique approach, and simple payment structure Tide is step in the right direction. It will be interesting to see how it develops as the competition heats up.
If your business fit’s within few accounts limitations, then it’s a no-brainer. At 20p per transaction, it is possibly the most cost effective business bank account around, and depending on your business could work well as a main or even back-up account. In our opinion it makes great sole trader bank account given that there’s no credit check and the barrier to entry is low.
Who owns Tide?
Before you jump into bed (so to speak) with a new bank, it makes sense to understand a little about its organisational structure and ownership. This is important as protection under the Financial Services Compensation Scheme (FSCS) is own on a per institution basis. For example HSBC owns First Direct that means if you have accounts with both of these, the £85,000 FSCS guarantee is split between them.
Who exactly owns tide then? Tide is a private limited company founded by George Bevis in 2015. Tide has a customer base of nearly 350,000 small and medium-sized business, making up a market share of over 5.5% in the SME sector. Notable investors include Augmentum Fintech, LocalGlobe and The SBI Group, a Japanese-based investor.
Tide has a partnership with Clear Bank providing customers with full FSCS protection on their deposits.