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Chime made $950M in 2021, growing 58% over 2020 and 128% annually over the previous 4 years.

In 2022, we estimate Chime made $1.85B.

Chime makes money in two ways. It takes a portion of the 1.5% to 2% interchange fee Visa charges a merchant every time a customer uses Chime’s card that contributes ~80% to Chime’s topline. Chime also makes ~20% of its revenue from fees its customers pay for using out-of-network ATMs. 

Note: The horizontal axis has a logarithmic scale for visual clarity.

Chime raised $2.3B from Sequoia, DST Global, Menlo Ventures, and Crosslink Capital. Its last private valuation is $25B at a revenue multiple of 26x. Chime last raised funds in August 2021, at the peak of the fintech valuation cycle. Since then, fintechs have lost considerable value. Stripe reduced its valuation by one-third to $63B, and Klarna raised new rounds at a valuation of $6.7B, 85% lower than its peak valuation of $45.6B. The Global X Fintech ETF fell 52% in 2022, compared to the 33% decline in NASDAQ, with public fintechs like Affirm, Dave Bank, Opendoor, and Upstart losing more than 90% of their market cap in 2022.

Chime was launched in 2012 to offer a mobile-based consumer-friendly banking experience, compared to traditional banks' branch-based and expensive banking experience. Chime’s business model is backed by a provision in the 2010 Dodd-Frank Act that lets smaller banks charge higher interchange fees than their bigger counterparts. Instead of making money from lending or charging hefty fees, Chime takes a cut of the interchange fee from its partner banks, Stride Bank and Bancorp.

Chime’s no-fee checking accounts, mobile app-based banking, and 2 days early access to paycheck attracted mostly middle-income millennials, living paycheck to paycheck and earning $45,000 annually, who were mostly ignored by the large incumbent banks. Access to customers' financial data enables Chime to offer new products, which it can push to all 14.5M customers as an app update with no incremental CAC.

Chime’s customer base doubled in 2020, as it provided a 5-day early access to stimulus checks for customers who had their Chime accounts set-up for direct deposit, and people stuck at home used their mobiles to access banking services.

Chime offers consumer banking products through its mobile app and cards. Chime’s products include:

Chime is the largest neobank in the US with ~21.6M users, followed by Dave with 10M, Varo with ~7M, and Current with 4.6M, and has a 35% share of all digital bank checking accounts in the US. Chime grew by offering a superior consumer experience through its app, but incumbent banks like Chase and Capital One are closing the gap by improving their digital offering. In H1 2022, Chime’s app was downloaded 6.7M times, compared to 7.7M of Capital One, 6.3M of Chase, and 5M of Bank of America. 

Chime also faces competition from Block’s CashApp and Paypal’s Venmo, which sell to the same customer base as Chime. For instance, CashApp uses Pinwheel’s direct deposit switching APIs to let users connect their payroll to their CashApp wallet, obviating the need to use a separate bank account. 

Fintech infra companies like Marqeta and Lithic enable vertical SaaS companies to embed financial services in their product and cross-sell to their users, such as Uber drivers using Uber’s debit card for most of their transactions or restaurant employees using Toast-issued debit cards for receiving their paychecks and spending money.

Lending and new credit products

Over the last few months, Chime has acquired numerous state licenses for issuing loans, brokering loans, and servicing/collecting consumer debt. These states include Arizona, Idaho, Kansas, and Oklahoma. While Chime already offers a credit builder product to its customers, procuring these licenses indicates Chime’s intentions to sell more credit products, including consumer loans, to its users.

Reduction in consumer spending

Chime could be hit harder than incumbent banks as consumers scale back their spending in an uncertain economic environment as unlike the incumbent banks, Chime’s interchange-based business model is indexed on consumers spending more and more. Also, its paycheck to paycheck customer base is the first to reduce spending as recessionary pressures grow in the economy. 

Decline of primary bank account 

With more and more Americans opening up multiple accounts across banks, brokerages, crypto apps, and others, the concept of one account being their ‘primary account’ from where they make most of their purchases is depreciating. Customers prefer to move their money to different apps/accounts that provide them better offers/cash-backs/convenience rather than sticking with one bank account.