British banking app Revolut has launched commission-free stock trading in the U.S. in a move aimed at competing with online brokerages such as Robinhood (HOOD) and Charles Schwab (SCHW).
The launch by Revolut comes amid a broader surge in retail stock trading, which escalated last year when investors latched onto so-called "meme stocks" that included GameStop (GME) and AMC Entertainment (AMC).
U.S. retail traders bought $281 billion worth of stocks in 2021, up from $38 billion before the pandemic in 2019, according to Vanda Research.
Offering U.S. stock trading is part of Revolut's efforts to become a so-called “super app,” where consumers can manage every aspect of their finances, the company said. Revolut also offers payments services, cryptocurrency trading and savings accounts.
U.S. Revolut customers can now trade full and fractional shares of more than 1,100 securities listed on the New York Stock Exchange and NASDAQ, including more than 200 exchange-traded funds (ETFs).
Zero-commission stock trading is already available to Revolut users in the United Kingdom and across Europe. The company was valued at about $33 billion U.S. through an investment round in July, and is currently Britain's second-most valuable fintech company after Checkout.com.
Similar to Robinhood, Revolut will rely on payment for order flow to earn revenue through its commission-free trades, a controversial practice in which brokers route trades to market makers in return for a fee.
The Securities and Exchange Commission is currently considering whether to reform or ban the practice. The SEC has expressed concern that commission-free trading brokerages may encourage investors to trade more, in order to capture more PFOF, even if that is not in the investors' best interest.
