The free trade is the smallest part of the bill
Ask most people how an app with no trading commission makes money, and they will say it doesn't, or that it makes a little on each trade. Robinhood's annual report for 2025 gives a different answer. The company's revenue that year was $4,473 million. Buying and selling shares of stock, the thing the app is known for, brought in $302 million of it.
Most of the rest came from customers who do other things. Some trade options or crypto. Some borrow money to invest. Some simply leave cash in their account. Some pay a monthly subscription. Most of these earn the company more than the share buyer does, and the subscription is not far behind. Once you see the list, "free" stops looking like a gift and starts looking like a way of sorting who pays.
Where Robinhood's 2025 revenue came from
Robinhood's 2025 annual report divides its revenue roughly as follows. Option trades : $1,123 million. Crypto trades : $901 million. Other transactions, driven largely by prediction-market contracts and instant withdrawals : $302 million. Interest on loans to customers who borrow to invest (margin loans) : $573 million. Interest on cash, securities and deposits it holds aside under customer-protection rules : $319 million. Its share of the interest on idle customer cash placed at partner banks : $229 million. Lending customers' shares to other investors, after paying customers their share : $190 million. The Gold subscription : $179 million. Stock trades : $302 million.
Together, interest of all kinds made up $1,514 million, about a third of the total. Nearly every line except stock trading depends on customers doing something more than buying shares.
The cash you leave idle is earning for the app
Money sitting uninvested in a brokerage account is not idle for the broker. Robinhood moves much of it to a network of partner banks in what it calls a cash sweep. The banks pay interest on it. Robinhood passes part of that interest to the customer and keeps the difference. In 2025 that difference came to $229 million on an average of about $30.9 billion in swept cash. The company reports this as a yield of 0.74% a year.
Robinhood also earns interest on the cash, securities and deposits it must hold aside under the rules for customer money : $319 million in 2025. Not all of that comes from money customers left sitting, because the assets behind it also include deposits with clearing organizations. At a traditional broker, idle cash is even more central. Charles Schwab's 2025 annual report calls uninvested client cash its "primary funding source" for the assets it earns interest on.
Why trading firms pay to fill your orders
When you tap "buy" in an American stock app, the order usually does not go to a stock exchange. It goes to a large trading firm, known as a market maker or wholesaler, that sells you the share itself. The firm earns the small gap between the price at which it buys and the price at which it sells, called the spread. It pays the app part of that gap for sending it the order. This is called payment for order flow.
Robinhood's own disclosure for the second quarter of 2026 sets out the terms. For stocks during regular market hours, it receives 12.35% of the spread. For options, it receives a fixed amount per contract, between $0.30 and $1.20, set by how wide the spread usually is for that option. Options are Robinhood's largest single revenue line. The disclosure explains how each order is paid for, not why options earn more in total ; that also depends on how much its customers trade options, and the filings do not separate the two.
Borrowers and lent-out shares pay too
Customers who borrow from the app to buy more than their cash covers pay interest on the loan. At Robinhood these margin loans averaged about $11.4 billion in 2025. They earned the company $573 million, at a reported yield of 5.01%. That makes the borrowers' interest a larger source than all of the stock trading.
Brokers can also lend customers' shares to investors who want to bet on a price falling, and collect a fee for doing so. Robinhood earned $190 million this way in 2025, after paying customers their share.
Subscriptions and crypto are a separate story
Robinhood also sells a monthly subscription, Gold, which brought in $179 million in 2025. Crypto is a large line on its own, at $901 million. Most of it works differently from payment for order flow on stocks and options, and Robinhood's filings report it under a different name, "transaction rebates". The company has also begun letting customers pay a direct fee on certain crypto orders instead. Either way, that money comes from the people who trade crypto, not from the people who buy shares. So does a further $302 million from other transactions, largely bets on prediction markets and fees for instant withdrawals.
Every broker splits the bill differently
Robinhood's mix is not every app's mix. At Charles Schwab, one of the largest American brokers, net interest revenue was $11,750 million out of $23,921 million in 2025, roughly half. Payments from trading firms were $1,930 million, about 8%. Fees for managing funds and accounts brought in $6,506 million. Commissions, which Schwab still charges on some trades, came to $1,797 million.
One pattern does hold at both companies : option orders bring in more than stock orders. Of Schwab's payments from trading firms, $1,167 million came from option orders and $763 million from stock orders.
Does selling your order cost you on price?
This is disputed, and both sides have evidence. Robinhood says in its disclosures that receiving these payments "does not interfere" with getting customers the best price. The same document notes that the US regulator's examination staff "has observed that there is a potential tradeoff" between the payments a broker receives and the price its customers get.
In 2022 the US Securities and Exchange Commission said that more than 90% of small investors' orders go to a small group of wholesalers. In support of a proposed rule to force order-by-order auctions, its staff estimated that these investors were missing about $1.5 billion a year compared with what open competition would give them. That was an estimate, not a measured loss, and the industry disputed it. The SEC withdrew the proposal on 12 June 2025, effective 17 June, without adopting it. In Britain, research cited by the CFA Institute found that the share of small trades executed at the best quoted price rose from around 65% to more than 90% between 2010 and 2014, a period spanning the 2012 decision by Britain's regulator that effectively ruled the practice out.
Banned in Europe, under review in Britain, legal in America
The European Union banned payment for order flow for retail clients in an amendment to its markets rules that took effect on 28 March 2024. Countries could exempt their own brokers' domestic customers until 30 June 2026, and only Germany did. Since 1 July 2026 the ban applies across the EU. Germany's regulator, BaFin, set out on 22 July 2026 which business models it still accepts.
Britain never passed a law against the practice. In 2012 its regulator at the time concluded that such payments create a conflict between earning the payment and getting each client the best price, which in practice ruled them out. In March 2026 the Financial Conduct Authority said it would review that position. Its May 2026 plan of regulatory work still describes a review, and it has not yet said what it will propose. In the United States the practice remains legal. Brokers must disclose it in quarterly reports like the one quoted above.
- EU MiFIR amendments prohibiting payment for order flow entered into force on 28 March 2024
- ESMA Interactive Single Rulebook : MiFIR Article 39a
- ESMA list of member states using the temporary exemption from the PFOF prohibition
- The PFOF ban comes into force
- CFA Institute : Payment for order flow in the United Kingdom
- FCA eyes potential payment for order flow shake-up
- FCA regulatory priorities : wholesale markets
- FCA Regulatory Initiatives Grid, May 2026
Who pays for a free stock trade
Commission-free trading is real for the person who buys a share. But the app is not a charity, and the money comes from somewhere. Some of it comes from the stock order itself, through what the trading firm pays to fill it. Far more comes from the option trader, the customer borrowing on margin, the crypto trader, and the cash that sits in an account earning the app more than it earns its owner. The filings show where the revenue comes from. They do not show that one customer's payments cover another customer's free trade, or that any particular order got a worse price. At Robinhood in 2025, stock trades came to $302 million out of $4,473 million. Most of the bill was paid elsewhere.
