How Does Chime Make Money?

How Does Chime Make Money?

Chime is a modern, thriving financial tech company. It offers users a way to deal with money without putting up with the fees and difficulties associated with traditional banking. Launching in 2012, Chime has seen tremendous growth over the past decade, with a current estimated worth of 25 billion dollars.

I think that Chime is excellent from a user perspective, and I admire its stance in helping people to manage their money better. The fact that they aren’t classified as a bank allows them to sidestep many of the processes that push people on lower incomes into debt.

But exactly, how does Chime make money? After all, users don’t pay fees to use Chime, and there are no overdraft fees to pay. There’s a simple answer to this, and I find Chime’s revenue model interesting to watch.

The Bottom Line Up Front

 How Does Chime Make Money?

Chime makes most of its revenue from interchange fees, which doesn’t impact users; Chime gains a small amount of income by taking some of the 1.5% transaction fees merchants must pay to Visa. These small, regular amounts quickly add up.

Chime also makes money from some ATM fees if users withdraw cash from an ATM outside of Chime’s networks.

It also gains some revenue via interest on short-term loans to other financial institutions. Again, this doesn’t impact users but does provide a side revenue stream for the business.

How Does Chime Work?

Chime is a financial tech company. It works by offering mobile banking services to users with no fees attached. On signing up, users will have access to Chime’s online banking system and Visa debit or credit cards.

There are many benefits for customers, including:

  • The ability to open a savings account or a checking account with a physical debit or credit cards
  • No fees, including overdraft fees
  • Making and receiving payments (similar to other online services like Zelle)
  • Super-fast, easy online service using the app
  • The ability to withdraw cash at 38,000 locations, free of charge
  • Features like Automatic Saving, which immediately transfers 10% of a paycheck into a savings account without users having to do it themselves
  • The ability to access wages early, avoiding debt-spiraling payday loans
  • Credit building assistance using their Credit Builder card.

However, Chime is not a traditional bank. This means that there are limited account options, and Chime has the right to cancel the accounts of users at any time. However, they’re not beholden to the same strict rules as regular US banks, and contacting Chime regarding an account closure has not been the easiest process for some users.

Chime makes money in the collection of interchange fees. This doesn’t impact the customers but does provide Chime with a healthy revenue flow. It has 12 million account holders, and while not all of those users may be active, it’s reasonable to assume that most of them use Chime’s services regularly.

Chime Founding & History

Let’s take a look at how Chime came to be.


Chris Britt chime ceo

Chris Britt and Ryan King founded Chime back in 2012. A San Francisco tech start-up was designed to create a modern solution to regular banking and to speed up some of the processes that make regular banking frustrating. They also felt passionate about helping those on low incomes to manage their money.

In an interview with Goldman Sachs, Britt states that he ‘wanted to serve a broad segment of Americans that had accounts at traditional banks that just weren’t happy with those relationships.’

This gap in the market was suitable for Chime. It was created to make money management more manageable, including for lower-income users. For example, they allow users to withdraw money from their wages a couple of days early; this is a draw for those on lower incomes living paycheck to paycheck.

Their credit-builder card was another popular draw for this demographic, allowing those with no credit to improve their score slowly.

Public Launch

People began to hear about Chime in 2014 after appearing in a segment on the Dr. Phil Show (in which Dr. Phil gifted a pre-loaded Chime card to a woman in difficult circumstances).

They acquired funding from several private sources, and in 2018, they acquired Pinch, a similar financial start-up.

With Pinch’s co-founders on board, Chime gained many users, eventually building to 12 million in 2021. In addition, it continues to gain private investment.

Covid-19 Response

In response to the Covid-19 pandemic, Chime gave applicable users a $1,200 advance on their Economic Stimulus Payment check; this meant that many users acquired their money a week early, easing financial pressure in a difficult time.

Recent times have been tougher: Chime was caught up in the wave of tech layoffs in late 2022, terminating 12% of its workforce in November. Of course, various factors contribute to the downturn in fintech, so this is unsurprising.

At the time of writing, Chime’s co-founder Britt remains optimistic: he described the layoffs as necessary to allow the company to grow ‘regardless of market conditions and is still hiring for certain key positions. They’re also expanding into Canada.

The company’s IPO date is yet to be confirmed but is expected in 2023.

How Chime Makes Money: The Revenue Model Explained

To put it simply, Chime makes the majority of its income via interchange fees (or transaction fees), similar to companies like PayPal and Square. But how does it work, and how much money can they make from this strategy?

Interchange Fees

Chime is not a bank in itself. Instead, it partners with two small banks, The Bancorp Bank and Stride Bank. Although some refer to Chime as a ‘neo-bank’, the founders are keen to establish themselves as a fintech company. (This is particularly important given that a California regulator specifically prohibited Chime from referring to itself as a bank.)

Chime gains a small amount of income by taking some transaction fees charged to merchants whenever an account holder uses their debit card. Merchants pay fees of around 1.5% to Visa for each transaction, and Chime gets a percentage of this.

With so many users, these small fees quickly begin to add up. Say a typical Chime user taps their card several times a week; each time, Chime gets a cut of those fees, whether those purchases are big or small.

This makes sense from a user perspective, too; using Chime, they’re side-stepping account fees, overdraft charges, and ATM fees, so they’re more likely to use Chime to save money. With 12 million users altogether, that’s a lot of small transactions to gain income from.

ATM Fees

atm fees Chime users

There are 38,000 ATM locations for Chime users (using the networks VPA and MoneyPass). Customers can use ATMs on different networks, but they have to pay a $2.50 fee to do this.

Chime receives some of this fee. While this isn’t its main source of income, it does make up a good chunk of its revenue.


Chime’s automatic savings feature is excellent from a customer perspective: it takes a percentage of users’ paychecks and transfers it directly to a high-yield savings account. In addition, Chime can lend these funds out to various financial institutions in the short term; this gives them a pretty decent reward in terms of interest.

This doesn’t impact users, but it does give a boost to Chime’s revenue stream.

Chime’s Market Cap and Stock Performance

Chime’s latest market valuation set the company’s worth at around $25 billion. In 2021 alone, it reached nearly $1 billion in revenue.

Chime’s IPO (initial public offering) was scheduled for March 2022 with the assistance of Goldman Sachs but was pushed back to the end of 2022. We’re still waiting for this in 2023, but co-founder Chris Britt has stated that he does intend for Chime to become an independent public company.

Investment is, at least for now, restricted to private funding. However, I’d say that Chime is one to watch. While there is a slump in fintech (reflected in Chime’s recent round of layoffs), Chime does offer what many people are looking for, so once the lingering uncertainty in the tech market subsides, it may be a good one to invest in.

Chime’s Future and Business Strategy

We’re waiting for Chime’s IPO date, which will be an obvious milestone for the company. The future for Chime remains optimistic; current circumstances make it difficult to judge the timing of its IPO, but that doesn’t mean that they

I’d expect Chime to invest in more projects to help people build their credit scores and manage their finances; what this looks like is hard to tell at this stage, but it’s exciting to watch.

Chime’s mission statement seems to be particularly invested in the Millennial generation, helping them to manage their finances: it will be interesting to see how they can expand their tools and features to help this age group and whether they will start to focus on younger generations (like Gen Z) too.

Because Chime is not a traditional bank, it is somewhat limited in how many financial services it can offer users. However, it’s possible that Chime will develop other projects to allow people to manage finances that don’t involve directly managing money (for example, budgeting help and advice).

This is a possibility because the co-founders seem to care deeply about Chime’s relationship with its users. It does seem to want to fill a ‘customer advice’ gap left by tech-savvy Millennials who prefer to avoid regular banking.

Chime’s Competitors

oxygen northone and avant bank

Chime’s main competitors are similar fintech companies, like Oxygen, NorthOne, and Avant.

For example, Oxygen is a ‘modern digital banking platform’ aimed specifically at entrepreneurs and freelancers. They’ve cornered a niche market here and are performing pretty well, raising $20 million in funding, making them one to watch for the future.

Avant is another very similar business. It works with WebBank to offer loans and credit cards, gaining one million users in 2021.

Finally, I think that NorthOne is worth a mention: it’s a financial tech company aimed at small business owners and has acquired millions of dollars worth of funding from private investors.

These business competitors to Chime are worth watching for future investment if you’re interested in financial tech.

Frequently Asked Questions

Before you go, here are some frequently asked questions about Chime:

Question: How Does the Chime Credit Builder Card Work?

Answer: Chime’s Credit Builder card is a secured credit card to which you can add funds. Then, you can spend up to the amount you’ve invested. This slowly raises the user’s credit score without the risks associated with traditional credit cards.

Question: Is Chime Safe to Use?

Answer: Yes, it is safe to use. It partners with Federal Deposit Insurance Corporation (FDIC) insured banks, which means your money is protected by the US government (up to $250,000) if Chime fails. This, and the security measures in place on the app, make Chime safe to use.
However, it’s worth noting that Chime can shut down the accounts of users at any time with no explanation. There was a spate of account closures in 2021 that caused problems for many users, although these complaints appear to have slowed down now.

Question: Is Chime Only Available in the United States?

Answer: Yes, at the time of writing, Chime is only available in the US. However, there may be plans to expand, with the company opening an office in Canada for the first time.

Chime’s business model is an interesting one. It’s a win-win: customers can avoid some of the fees associated with traditional banking, as well as make the most of Chime’s features specifically designed for those on lower incomes.

Meanwhile, Chime gets a cut of the transaction fees. This means that whenever a user taps their Chime Visa card, they get a small amount. And while those amounts may be small, they’re regular enough to create a healthy revenue stream for the business.

It’s worth keeping an eye on Chime’s IPO date. While they’re keeping their cards close to their chest regarding the actual date, and they’ve experienced some difficulties in the fintech downturn, I think Chime is set to do well when it becomes an independent public company.

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