How Does Neobank Chime Make Money? 

Chime is an American neobank that offers various financial products, such as a free spending account, through its mobile application. 

Founder Chris Britt has raised $2.3 billion in funding for Chime, which is currently valued at $25 billion – making it one of the world’s most valuable startups.

Chime is not an actual bank, though. In fact, it is prohibited by law to refer to itself as a bank. 

As a digitally enabled bank, Chime does not operate any physical customer branches nor ATM terminals.

But how does Chime, which is completely free to use and doesn’t charge overdraft fees, actually make money? 

Interchange Fees

Merchants pay a so-called interchange fee, which is between 1 – 3 percent, whenever someone uses the Chime-branded debit card.

Interest On Deposit

Chime’s partner bank uses the money deposited in its accounts to lend it to other institutions at a higher interest rate that Chime pays.

ATM Fees

Chime charges customers 2.5 percent whenever they retrieve cash from an ATM that is outside its network of 60,000 cash machines.

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