Lower rates compress Revolut margins

Revolut’s recent profit step up says more about rates than about a permanently transformed margin structure. In 2025, interest income reached £974M, up from £790M in 2024, while the 2025 report also shows Revolut still monetizes a broad mix of lower take rate activities like card spend, FX, and trading. If base rates stay lower for long enough, the easy earnings lift from customer balances fades and revenue mix shifts back toward products that need much higher user activity to produce the same profit.1 2 3 4

• Interchange is useful but thin. In neobanking it is usually a small cut of each card purchase, often around 0.7% to 1.5% of transaction volume, and partner banks may take part of it. That means replacing lost interest income requires a lot more swipe volume than adding another pound of deposit spread.3 5
• Revolut’s own history shows the sensitivity. Earlier peer analysis found interest income was the main driver of neobank revenue reacceleration when rates rose, and Revolut’s reported interest income jumped from about £500M in 2023 to £790M in 2024, then to £974M in 2025, but growth slowed to 23% in 2025 as rate normalization began.1 2 4
• The fallback is not a single product, it is a bundle of lower margin money flows. Revolut can lean on debit card spend, merchant acquiring, FX, subscriptions, trading, and lending, but those lines require heavier product usage, sharper pricing, and in some cases more credit or market risk than earning spread on parked balances.3 4 5

Going forward, the winners in neobanking are likely to be the ones that use deposits as a springboard, not as the whole story. For Revolut, that means turning balances into a fuller relationship with credit, subscriptions, business banking, and daily spend so profit can keep compounding even when rates stop doing the work.3 4 5