How Robinhood Makes Money
Our mission is to democratize our financial system. Earning revenue allows us to offer you a range of financial products and services at low cost, including commission-free trading. Here’s how our US entities generate the vast majority of their revenue:
Here’s more detail on how our US entities make money:
Robinhood Gold, a suite of powerful investing tools, gives you access to Morningstar research reports, NASDAQ Level II Market Data, bigger instant deposits, and margin investing. You pay a $5 monthly fee for the service. When you invest on margin, you’re borrowing funds from Robinhood Securities. After the first $1,000 of borrowing, you pay interest at an Annualized Percentage Rate of 5%.
When you buy or sell stocks, ETFs, and options through your brokerage account, your orders are sent to market makers for execution. To compete with exchanges, market makers offer rebates to brokerages. Market makers typically offer better prices than exchanges.
Robinhood Securities has relationships with a number of market makers and sends your order to the one believed to be most likely to give you the best execution quality. Rebates aren’t considered when your brokerage orders are routed.
Similarly, when you buy or sell crypto on Robinhood Crypto, your order is sent to one of various trading venues that allow you to receive competitive prices. Robinhood Crypto receives volume rebates from trading venues. Rebates aren’t taken into consideration when your crypto orders are routed.
Robinhood Securities generates income on uninvested cash that isn't swept to the Cash Management network of program banks, primarily by depositing this cash in interest-bearing bank accounts.
Robinhood Securities earns income from lending stocks purchased on margin to counterparties.
Sutton Bank, which issues the Robinhood debit card pursuant to license by Mastercard® International Incorporated, receives an interchange fee that is passed to Robinhood Financial, our US introducing broker. Interchange fees are earned by most debit and credit card issuers and are meant to cover things like transaction processing and fraud loss. The Robinhood debit card is offered in connection with a brokerage account provided through Robinhood Financial LLC, member of SIPC and FINRA.
Robinhood Securities and Robinhood Financial also receive fees from program banks for sweeping funds to them.