The Chime Business Model – How Does Chime Make Money?

Executive Summary:

Chime is an American-based neobank that offers various financial products through its mobile applications. As a digitally enabled platform, Chime does not operate any physical branches. The app comes with a physical Visa debit card.

Chime makes money by charging so-called interchange fees for every transaction conducted with the card, interest earned on cash, as well as ATM fees.

Founded in 2013 by banking and technology executives, the company has seen a continuous rise in user growth and adoption of its products. Today, Chime counts over 12 million customers that conduct an average of 40 transactions per month.

How Chime Works

Chime is an American neobank that offers various financial products and services. As a digitally enabled bank, Chime does not operate any physical customer branches. Instead, customers use Chime’s mobile app to keep their finances in check.

Authentication and registration for accounts occur within video identification. Chime claims that accounts can be set up within 2 minutes.

On top of the digital account, users will receive a free Visa debit card to be able to spend their hard-earned dollars.

Other features of the app include:

  • Detailed overview of account balance and spending history
  • Automatically setting money aside into a savings account
  • Getting paid early with direct deposits
  • No overdraft fees applied
  • Fee-free withdrawal at over 60,000 ATM’s across the US
  • Instantly being able to pay other Chime users

… and many others. The company’s appeal comes from simplifying the whole banking process from setting up an account to the removal of hidden fees.

Chime can be used by any American citizen above 18 years of age. More specifically, accounts can only be offered to members with a valid SSN, living address in the United States and District of Columbia.

Apart from a debit account, users can also open up a Savings as well as Credit Card Account (named Credit Builder). Its Credit Builder product is aimed at millennials and Gen Z consumers that would like to be more financially responsible and build up their credit scores.

The creation of Credit Builder is based on Chime’s 2018 acquisition of Pinch, a service that focused on helping young adults build better credit. Its founders supported Chime in the creation of the product.

As opposed to its FinTech counterparts in Europe (more on that later), Chime does not possess a banking license. Instead, it teamed up with The Bancorp Bank to protect accounts against any type of default.  

Does Chime Offer Business Accounts?

Chime does currently not offer any business account. The company is still solely focused on expanding its consumer product.

Its leadership hasn’t commented on any future expansion plans yet. But given that other competitors, such as Revolut and N26, offer business accounts, it can be assumed that Chime will eventually follow suit.

A Short History Of Chime

Chime was founded in 2013 by Chris Britt (CEO) and Ryan King (CTO). Prior to starting Chime, Britt was working as an executive in the financial space, handling product development for companies like Visa or the Green Dot Corporation.

At Green Dot, Britt was focused on helping the underbanked portion of society receive and set up their first bank account.

In the early days, Chime served as a quasi-extension of someone’s existing bank account. Customers could use the free-of-charge debit card to make payments or retrieve money.

In turn, users would receive real-time updates on their spending and account balance. Even in today’s banking world, these features are not present within every banking application – let alone in 2014, when Chime finally was released to the public.

Throughout the years, Chime continued to add new features to its service while simultaneously growing their user base.

As opposed to many of its European competitors, Chime does not possess a banking license yet, despite some reports indicating that it has tried to acquire it in the past.

Right now, the company is continuing to focus on acquiring new users and branch out from its primarily low- and mid-income customer base towards bigger accounts.

The company has also proven to care for its users. In April 2020, it started paying out stimulus checks 2 days prior. Chime essentially utilized their own funds to finance the initiative. A 1,000 users were part of the initial trial, which is now accessible to all customers.

In September 2020, the company announced its latest round of funding. The investment made Chime the most valuable FinTech consumer startup in the U.S., surpassing Robinhood along the way.

To increase its visibility, Chime is spending aggressively on marketing and branding campaigns. Earlier in 2020 it signed a multi-year brand partnership with the Dallas Mavericks. The deal made Chime the team’s official jersey sponsor.

The company, furthermore, continues to expand its product line to increase user retention and create future opportunities for cross-selling. In March 2021, Chime launched a P2P payment service to compete against the likes of Square Cash and Zelle.

Yet, not everything was always going according to plan. After an investigation by the California Department of Financial Protection and Innovation, Chime agreed to not refer to itself as a bank anymore (Chime itself does not possess a banking license and offers most of its banking service through a cooperation with Green Dot Bank).

Months later, in July, the company made news after hundreds of customers reported that they were not able to access their money for months at a time due to suspicions of fraudulent activities (referred to as “forced account closures”) .

Despite the turmoil, Chime managed to continue to attract customers and investors. In August 2021, it raised another round of funding that upped its valuation from $15 billion to $25 billion.

How Does Chime Make Money?

Chime makes money via interchange fees, interest earned on cash, and ATM fees. Let’s dive into each of these revenue streams in more detail below.

Interchange Fees

Chime generates revenue by charging interchange fees (i.e. fees merchants pay to financial institutions) whenever their debit card is used.

In the case of Chime, merchants pay around 1.5 percent of the sale amount to Visa. A portion of that 1.5 percent is then shared with Chime.

According to CEO Britt, Chime’s users conduct an average of 40 transactions per month. And if you take into account that the average U.S. adult uses the same primary checking account for about 16 years, this can bring in an immense amount of transactions and fees over time.

Part of Chime’s appeal stems from the fact that legacy banks often charge fees on many different occasions, including ATM charges, overdraft fees, account maintenance fees, transfer fees, international fees and non-sufficient fund (NSF) fees. Meanwhile, Chime’s users don’t pay any of these “penalty” fees.

This strategy seems to have worked out so far. Chime recently reported that it has crossed the eight million customer mark. This represents an 800 percent increase from the 1 million users the company had in 2018.

On top of that, CEO Britt claimed that most of the newly added customers come from the big banks like Wells Fargo or JPMorgan Chase.

Interest On Cash

If users want to set their money aside, they can do so by opening a high yield savings account with Chime.

The FinTech offers the account along with its Automatic Savings feature. Furthermore, the account also remains fee-free.

Chime currently offers a 0.5 percent Annual Percentage Yield (APY) on the account’s balance. The national average, according to the company, is at 0.06 percent.

Now Chime obviously doesn’t just pay out money to its users for noble reasons. Just like any normal bank, uses the cash residing on user accounts to lend it out to other institutions, such as said banks.

They then collect interest from these institutions (also called Net Interest Margin). For 2019, according to Statista, net interest margin for all U.S. banks was equal to 3.35 percent.

ATM Fees

Lastly, Chime makes money whenever a user substracts cash from an ATM outside the MoneyPass and VPA networks.

In this scenario, Chime charges $2.50 per withdrawal. The ATM provider may charge an additional fee at their discretion.

In January 2021, Axios reported that ATM fees make up 21 percent of the revenue that Chime generates.

Chime Competitors

According to a report issued by Facts and Factors Market Research, the digital bank market is expected to reach a combined valuation of $578 billion by 2027. This represents a 31 fold increase from the $18.6 valuation the market reached in 2018.

While the people using neobanks as their primary bank account remain in the single percentage digits, their increasing importance cannot be denied.

This section will therefore take a closer look at Chime’s biggest competitors in the neobank space. Nevertheless, their main competition remains to be the traditional banks like Wells Fargo or Bank Of America.


Revolut, headquartered in London, was founded in 2015 by Nikolay Storonsky (CEO) and Vladyslav Yatsenko (CTO). Next to a digital bank account, the company offers solutions such as digital peer-to-peer payments, trading options, and budgeting tools.

Revolut monetizes consumers (and businesses alike) through monthly subscription plans, offering one free and two premium plans. Other sources of income include overdraft fees, insurance or stock commissions, interest paid on loans, or their cashback program.


N26 (formerly Number 26), headquartered in Berlin, was founded in 2013 by Valentin Stalf (CEO) and Maximilian Tayenthal (CFO). The company offers various banking tools for both private consumers and businesses alike.

As with Revolut, N26 monetizes its customers and businesses through premium monthly packages. Other streams of revenue include withdrawal fees, overdraft and loans, or partnership programs through cashback.


Monzo, a FinTech out of London, was founded in 2015 by Tom Blomfield (CEO), Tom Foster-Carter (COO), and others. It offers a variety of banking solutions such as bank accounts, savings and borrowing options, or purchasing energy plans.

Monetization occurs through subscriptions for premium or business accounts, interest on loans, and commission (e.g. when purchasing an energy plan). 

Like N26 (and frankly all other mobile banks), Monzo’s account comes with a Mastercard, which is directly connected to the mobile app.

Starling Bank

Starling Bank, founded in 2014 by banking veteran Anne Boden (CEO), is another challenger bank out of London, UK. It offers current as well as business banking accounts. Furthermore, users can apply for loans and send money to others, both domestically and internationally.

Starling puts an emphasis on social good and sustainable growth. As such, ¼ of the company is still owned by the founder and employees.

Chime Funding, Valuation & Revenue

According to Crunchbase, Chime has raised a total of $2.3 billion in 11 rounds of venture capital funding.

In its latest Series G round (August 2021), where the company raised $750 million, Chime was valued at $25 billion. This represents a $10 billion increase from its previous fundraising round (in September 2020).

Investors into the company include the likes of DST Global, Menlo Ventures, General Atlantic, Dragoneer Investment Group, and many others.

As with any startup in high growth mode, Chime does not publicly disclose its revenue or profit numbers. But, according to a report by Forbes, a person close to the company stated that Chime expected to reach $200 million in revenues for the fiscal year 2019. This represents a fourfold increase compared to the previous year.

Hi folks, my name is Viktor! By day, I lead a tech team of 10 for an e-commerce startup. At night, I work on expressing my weird thoughts through this blog. And if there's time, I cuddle my cat..