By
Steve Muchoki
April 26th, 2024
Revolut has a lot to gain from the stock trading offering in the United States, as more people are getting increased education to commit their funds to work for them as traditional investment options are no longer attractive.
United Kingdom-based financial technology firm, Revolut, is on track to debut its commission-free trading in the United States of America, after securing approval to provide stock market offerings in the country. As reported by CNBC, Revolut is all set to reveal it has secured a U.S. broker-dealer license, an allowance that will afford it the chance to compete head-to-head with the likes of Robinhood Markets Inc (NASDAQ: HOOD) and Square Inc (NYSE: SQ) in the fast-growing world of retail trading, according to the company’s co-founder and Chief Executive Officer Nik Storonsky.
Revolut says it is building the world’s first financial superapp. While the platform started out as a money transfer and exchange platform back in 2015, today, over 15 million customers around the world use dozens of Revolut’s innovative products to conduct more than 100 million transactions a month. To make good on its plans of becoming a superapp, it must explore American markets, which it now has the right authorization to compete for a market share amongst retailers.
“We are building a single app where people can manage all aspects of their finances, from banking and foreign exchange to cryptocurrency and stock trading,” Storonsky said. “We’re eager to break down common barriers to entry around stock trading such as account minimums and complex interfaces.”
Revolut has been in the US for a little more than a year, with offerings ranging from high-interest savings, business banking for consumers, and cryptocurrencies amongst others. The ability to offer stock trading is bound not just to aid the firm’s business, but it will give it a competitive edge as it says it will be lowering the barrier to entry with the offering of fractionalized stock purchases.
With the stock trading, users will be able to purchase the shares of companies listed on the NYSE, and NASDAQ, as well as Exchange Traded Funds (ETFs) products respectively.
Revolut to Compete with Robinhood as a Commission-Free Stock Trading Firm
Robinhood notably rose to prominence amongst retail traders with its commission-free model, which has allowed traders to gain more value atop their small capitals. Revolut is set to ride on this precedent by adopting the payment for order flow model to generate its revenue. This model works with the exchange charging market makers for its trade listings. While the model takes the burden away from consumers, it is becoming featured on the SEC’s radar, casting doubts on its long-term sustainability.
Revolut has a lot to gain from the stock trading offering in the United States, as more people are getting increased education to commit their funds to work for them as traditional investment options are no longer attractive.
In the long term, Revolut will explore public market listings which may either be in the US, UK, or both as noted by Ron Oliveira, head of Revolut’s US business. The decision may be borne from the fact that the firm is generating enough free cash flow and any other attempt for growth will only be logical from public investors.
