Not cool, N26

January 2016, I switched banks. I moved from my traditional german bank, GLS Bank, to the then one year old startup N26, formally known as “NUMBER26”. I’ve done this for the follwing reasons:

  • Real time banking: All transactions, like card payments etc. are instant.
  • Instant (!) Pushnotifications on my phone about any account activity such as a card payment in the store.
  • A mobile app that not only looks like a banking app in 2016 should but also offers advanced features:
    • Total control including the change of daily withdrawal and payment limits
    • Locking and unlocking my debit cards
    • Setting a custom PIN anytime
    • View all transactions in real time even before they clear
  • They not only offer their product in english (I use all my stuff in english) but also speak english to me on my statements and on the phone
  • I love their vision of being a european bank
  • They are the only bank in Germany apart from Fidor to offer a DEBIT MasterCard linked to a checking account (I’m not a big fan of the german national Girocard system all the other german Banks are using)
  • Contactless payment support (MasterCard / Maestro PayPass)
  • No usage fees when using the card abroad in non EURO countries
  • Free ATM withdrawals worldwide

Overall, I’ve been a very happy customer and for the most part, I still am. I gladly recommended their checking account to friends because I truly believed in the product.

But recently, they fucked up. Badly.

August 2016

The first serious fuckup happend last month. My public broadcasting service fees (a mandatory thing in Germany) were due as they were every three months. Those are to be payed to the GEZ, an institution with a very bad reputation, so I did not grant them electronic access to my account. Rather, I did setup a standing order that transfers the money to them five days before the fees are due.

On August 10th, the standing order was executed as planned. I got a push notification as always, entered the transaction into my budgeting software and moved on. So far, so good – nothing was unusual.

Two days later, on August 12th (a Friday), I got a notification that the transfer did not go through and that the money has been put back into my account. I called N26 customer support and they told me, that the receiving bank rejected the transfer because the IBAN was unknown. So I called the GEZ.

I talked to a friendly woman and she was very surprised after I told her, that her employer’s bank rejected the transfer (or so I was told by N26). Together with her, we double checked all the details including the IBAN, payment reference etc. and everything turned out to be correct. She then gave me an alternate IBAN to retry my transaction. So I did transfer the money to the new IBAN and that worked. I almost missed my payment because SEPA transfers are not processed over the weekend and the money was due on monday. I checked this one off as an odd glitch at the receiving bank and moved on.

The rest of the month went by as usual without any further incidents.

September 2016

I got my credit card bill for my Visa card that I have at Barclays Bank. It was a lot bigger than usual because I booked a high-class hotel for the 33C3 conference in December. That was expensive but I live on a Budget. I had the money saved over the months before so while this was a large bill, I was prepared to pay it with no stress. The balance is not automatically withdrawn from my checking account  so I have to transfer the money to them.

After the bad experience with the GEZ payment last month, I setup the payment of the credit card bill to be executed 9 days before it becomes due – just in case something goes wrong. And boy – I am happy that I did that.

The payment was executed as a one time standing order on Thursday, September 8th at 06:00 AM. Or so the N26 banking system told me via a push notification that morning. The money must arrive at Barclays by September 17th or they will charge me late fees and interest. Typically, I can see my payment in my credit card account the following day. Barclays is pretty quick in that regard. So I checked my online banking at Barclays a day later on Friday and saw no change. Same thing on Saturday. That’s were I began to worry that something went wrong.

In Germany, Banks typically clear SEPA transfers twice a day: Once in the morning at around 9 AM and once in the evening around 5 PM in a batch processing manner. That’s a relic from the old analog times where they received physical checks and stuff in the mornings and evenings. Despite real time banking: When it comes to SEPA transfers, N26 is bound to the same restrictions simply because all other banks are doing the same thing. According to this logic, the transfer should have been processed at Barclays by Friday evening at the latest. While Barclays does not update the transaction list, they do have an “credit available” indicator that will show that the balance is payed even if the payment is not in the transaction list yet.

If the "Available credit" (Verfügbarer Kredit) and "Credit limit" (Kreditrahmen) do match, the payment was processed, despite there is still a balance shown

If the “credit available” (Verfügbarer Kredit) and “Credit limit” (Kreditrahmen) do match, the payment was processed, despite there is still a balance shown

The picture above shows the two indicators matching. On Saturday, that was NOT yet the case. The “credit available” (Verfügbarer Kredit) number was still not equal to the credit limit (I did not use the card in September so once the payment arrives, those numbers MUST match). I checked the Barclaycard online Banking again on Monday evening, September 12th. Still no change. I really started to worry that my transfer got lost but kept my nerve. The next day I got an email from Barclaycard reminding me that the balance is due very soon, on the 17th. That triggered me to call them.

The support representative was very helpful and, just with the GEZ, he double checked all the details like the IBAN with me. It all matched my outgoing transfer that was recorded in my N26 account so there was no error on my part. He confirmed that they never received a SEPA transfer from me. To be sure he asked me to send him a screenshot of the outgoing transfer in my online banking so he can do some further investigating with their accounting department. I did that but have no response yet (at the time of writing, this was less than 24 hours ago so that’s okay). Since the Barclays representative was very clear that they never received the money, I checked my N26 banking again. They have an option, to download a preliminary account statement so I went and checked that:

The online transaction list did show my credit card payment. The statement does not …. hmm. Time to call N26 about that.

The N26 support representative was also friendly and helpful. He looked at my account and the transaction in particular and then told me that on that day (September 8th), they had technical issues so the transfer was “stuck” in their system but it should clear within 24 hours. He was very sorry about that but I told him that while this is “unfortunate”, it was not his fault (which is true, although N26 as an entity is most definitely at fault).

The good news: The N26 support kept word – the transfer cleared a few hours after that call and, as you can see from my Barclaycard banking screenshot, the payment does show up as the “credit available” and “credit limit” numbers now match.

The bad news: I am convinced that this is the same glitch that happened back in August. Both times, it involved standing orders. The last time I got notified automatically that the transfer had failed and I was told on the phone by N26, that the other bank rejected the transfer. After today, I don’t believe that anymore. I believe that the transfer back in August also got “stuck” in their systems and was simply dropped. N26 probably got a lot of complaints about that so this time, as the problem happened again, they did not drop the transfer but instead, silently executed it with heavy delay without notifying their customers. I have no proof of that but this is what I believe had happened.

Banks in the SEPA area are legally required to process transfers within one bank business day and N26 took four times as long for this one. While I am still very happy with them in general, executing transfers on time is a core business function of a bank which they should NEVER fuck up. And for me, they messed it up twice in two consecutive months in a row, making me question their reliability. I will keep a close eye on future transfers and should they mess up again, I will reconsider my banking options. My trust in N26 took a serious hit today.