Chime Chose Deposits Over BNPL
Ex-Chime employee on Chime's multi-product future
Chime avoided a product that looked like growth on the surface but carried weaker economics and messier risk underneath. Klarna’s model works by paying merchants upfront, charging them roughly 3% to 6%, and then taking the credit risk if shoppers miss installments. That can drive checkout conversion, but it also means margin pressure, funding needs, and fragmented consumer debt visibility. Chime instead leaned into direct deposit, debit, and small dollar credit tied to recurring cash inflows.
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Klarna was built as a merchant funded checkout tool, not just a lending product. In 2020 about 74% of revenue came from merchant commission, and Klarna paid retailers upfront while collecting from shoppers over time. That makes BNPL as much a sales and marketing feature for merchants as a credit product for consumers.
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The strain in BNPL showed up in unit economics. Klarna’s net transaction margin fell from about 2.0% in 2017 to 1.5% in 2020 as competition intensified, while loan loss rates rose with expansion. Later research frames Klarna’s response as moving beyond pure BNPL into shopping, banking, and direct payment rails.
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Chime’s lending logic was different. Its small loans were designed around users already routing paychecks into Chime, which gave it a clearer view of repayment ability. That fits the broader neobank playbook, where mature players use deposits, interchange, and tightly underwritten lending to expand revenue without taking checkout style merchant financed BNPL risk.
The next phase of consumer fintech looks less like standalone BNPL buttons and more like full money apps with deposits, cards, and carefully scoped credit. Klarna is already broadening out because pure BNPL is commoditizing, and Chime’s path points the same way, toward lending products built on existing account data and repayment flows rather than impulse purchase financing.