E-money vs bank accounts: How Tide keeps your money safe

When deciding on an account for your small business, the level of choice may sometimes feel overwhelming. There are so many factors to consider: are there any monthly charges? How much does it cost to make transfers? Can you sync with your accounting software? But, above all, you want to be sure that your funds are safe, should the worst happen and your provider goes out of business.

At Tide, we work tirelessly to give all our members a great business account. We’re always on the lookout for ways to help those who work for themselves save time and money with their financial admin. This is why we’re giving our members the opportunity to move from Prepay Solutions (PPS) e-money accounts to ClearBank FSCS-protected bank accounts. In this article, we’ll outline these changes, as well as highlight the differences between our e-money and bank accounts. We’ll also explain what we do to keep your money safe and what sets us apart from our competitors.

What are we changing?

At present, depending on when you joined us, your money will be held through one of our two trusted partners, PrePay Solutions (PPS) or ClearBank. If you’ve been with us a bit longer, and your sort code is 23-69-72, you have an e-money account provided under the license of PrePay Technologies Limited trading as PPS and regulated by the FCA. Newer accounts are ClearBank FSCS-protected (Financial Services Compensation Scheme) bank accounts. ClearBank is also authorised by the Prudential Regulation Authority and regulated by the FCA and the Prudential Regulation Authority.

We’re currently in the process of moving Tide accounts from PPS e-money accounts to ClearBank FSCS-protected bank accounts. In the coming months, you’ll have the option to upgrade your account and we’ll get in touch when this is available.

What is an e-money account?

The funds in your account are stored and protected as e-money. With an e-money account, your money is never invested or loaned out and is safeguarded in accounts that keep your money separate from the money we use to run Tide. As your funds are safeguarded, FSCS protection does not apply.

What is safeguarding?

Regulations require us to keep all of your money in accounts that are completely separate from the ones we use to run our business. This means that, if anything were to ever happen to Tide, your funds would be safe.

In the very unlikely event that an e-money institution goes out of business, it may take longer than an FSCS claim to return your money. As the return is handled by an insolvency practitioner or administrator, a small amount of your account balance may be deducted to cover the costs of the administrator.

How does a bank account differ from an e-money account?

With a bank account, eligible deposits will be protected up to £85,000* by the Financial Services Compensation Scheme (FSCS).

*Eligible deposits with ClearBank are protected up to a total of £85,000 by the Financial Services Compensation Scheme (FSCS), the UK’s deposit guarantee scheme. This limit applies to the total of any deposits you have with ClearBank. Any total deposits you hold above this limit are unlikely to be covered.

How can I tell which type of account I have with Tide?

If you’re unsure as to whether you have an e-money or bank account, there are 3 ways you can find this information:

1. Sort Codes: If the sort code is 04-06-05 – the account is with ClearBank, if the sort code is 23-69-72 – it is with PPS
2. Statements: The footer of members’ statements will give details of the account provider and terms
3. By requesting an Account Verification Letter (AVL) from Tide Member Support

So, is Tide a bank?

Although Tide is regulated by the FCA, we are not regulated as a bank. However, we are regulated as an e-money institute and for credit broking. We therefore still have to comply with FCA requirements and regulations.

We’re often asked, “So, when are you going to become a bank?”. The short answer is no. This may seem surprising at first, but all should become clearer when we explain our business model and what sets us apart from our competitors.

As our CEO, Oliver Prill says:

“Tide’s mission is to save our members time and money in their finance & admin. Our unique Business Financial Platform model covers the full range of products from current accounts to accounting – always focussing on making them work seamlessly together; this is our key value-add. For business accounts, Tide accounts are designed, branded and sourced by us from Clearbank and PPS – much in the same way Apple designs, brands and then sources its iPhones from manufacturers.”

A holistic financial platform

In our mission to support those who work for themselves and save small businesses both time and money, we take a holistic approach by putting our members at the heart of everything we do. Whether you’re just starting out as a sole trader, working as a freelancer, or looking to scale up by setting up a limited company, there’ll be a feature in the Tide app to support you.

With the Tide app, we’ve built an entire financial platform, offering a host of smart features with the aim of saving our members time with their finance admin. If we were a bank, our capital would be tied up, which would prove more restrictive. It would require us to put extra focus on areas such as capital requirements and regulations, which would potentially slow down innovation.

A smart toolbox of features

As Tide is not a bank, we’re able to focus our time on providing a broader breadth of services, which means we can be there every step of the way for those starting out on their own. We’re the only fintech company to offer free company registration, as we pay the £12 incorporation fee with Companies House. We also offer a virtual office address service for new companies, as well as a business current account for start-ups with no monthly fees, so you only pay for what you need.

The Tide app is a bit like a personal toolbox to help you run your business. Set up and edit both standing orders and Direct Debits, label your transactions to keep track of your expenditure, as well as electronically upload receipts. You can even sync your account to a wide range of popular accounting software, including QuickBooks, Sage, and Xero.

As your business expands, the range of Tide features within the app will grow with you. Tide Expense Cards are a great way to manage team expenses. You can have up to 50 cards per account and set spending limits for each team member too. Our Invoice Assistant will allow you to auto-match and chase invoices to ensure you get paid on time. You can even keep track of your cash flow and forecast any future problems with our Cashflow Insights tool.

You’ll also find account options to grow with your business. Tide Plus and Cashback accounts are perfect as you scale up, as they include extra benefits, including a number of free transfers every month, telephone support, and 24/7 access to legal support. We’re always developing new ideas to help make managing your finance admin even easier.

Note: Members, on any plan, can call the Fraud Rapid Response team by calling 159. Use +44 20 4587 0366 if you’re calling from abroad. Lines are open 24/7.

To wrap up

In summary, whether you have an e-money or a business bank account with Tide, your funds are protected. We’re currently in the process of moving Tide accounts from PPS e-money accounts to ClearBank FSCS protected bank accounts. In the coming months, we will be in touch with our members with a PPS e-money account and you’ll have the option to upgrade your account. What sets us apart from our banking competitors is that we’ve been able to build a financial platform, packed full of features to help our 350,000 members grow their businesses.