Revolut aims to be the UK’s answer to Amazon, but risks becoming the next WeWork

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With overseas expansion already in full swing and profits from mainstream banking proving increasingly elusive, the temptation is to jump into services where returns could be higher but the downside bigger – markets that probably wouldn’t touch a high street bank.

In the last year alone, Revolut launched a competitor to Airbnb called “Stays”; Entry into the precious metal trade; and somewhat inevitably made a belated attempt to surf the cryptocurrency wave by offering a virtual currency trading app despite growing regulatory crackdowns around the world, and when that inevitably comes to an end, what next?

The newest product on the menu allows workers to receive their salaries instead of waiting until the end of the month to smooth out cash flow. Revolut can also position it as a more socially responsible alternative to the pay-later agreements offered by Klarna and others.

While this doesn’t come with the same sky-high interest costs – Revolut plans to charge £ 1.50 per “loan” – the Financial Conduct Authority has raised concerns that borrowers don’t understand the real cost. That means that in some cases they can become more expensive than payday loans, while activists claim such programs can drive people further into debt.

The danger is that what Revolut is offering is actually a payday loan by any other name – calling it “payday” probably won’t help – a sector that clashed with regulators years ago and notorious for it was causing huge customer defaults.

Challenging the lower end of the credit market, an area fraught with tremendous reputational and financial risks, hardly seems like a path to wealth.

Revolut has been dubbed the “Amazon of Banking,” but there are unfortunate shadows from WeWork, the souped-up office space provider whose founder Adam Neumann had increasingly ambitious plans in pursuit of profit.

WeSleep (boutique hotels); WeSail (yacht charter); and WeBank (no explanation required) were just a few of the new ventures he envisioned to become part of a “We Company” roof that would “raise the consciousness of the world” before it eventually collapsed and burned. Revolut founder Nikolay Storonsky has to beware of similar overreaches.

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