Did Chime face backlash like Klarna as it expanded to credit, loans, etc.?

People mentioned it once or twice, but it never really took off to the extent of like, "Hey, we should do this." 

At the time, there was just so much regulatory scrutiny around BNPL that I think Chime were afraid to step in the space—which I think was smart, because what Klarna and all these other companies have been doing hasn’t been sustainable. 

As we saw with the market crash, those companies are all doing terribly now, because the risk is really high, and the regulators are just kind of upset by it—which I understand, primarily because it basically creates a huge visibility problem into the financial health of consumers.

Normally, if you're using a credit card, the credit card companies know how much credit you're using because it's all being reported back to these centralized credit bureaus. But with the BNPL companies, that usage isn’t being reported. 

People would use five different BNPL providers to sign up for six different loans, and then the bank doesn't know that you actually have this $1,200 obligation each month to pay off 12 different purchases. They can't see that, and they can’t put it in their risk model.

For Klarna and all them, I think they're happy to do it. But what's also interesting is that I don't think they're as profitable as people thought, because a lot of them made money being paid back by the merchants actually offering the BNPL deals. It’s not like they were making their money purely off the fees from the BNPL mechanism. If you were offering it for a TV, the TV manufacturer might be like, "Hey, we want people to buy more TVs. Klarna, we're going to pay you a little bit of money to make this feature available."

It’s really more of a feature add-on for retailers to sell more products. But yeah—Chime didn't really dive into that world too much, and I think it was smart. Banks don't like the fact that they don’t have visibility into it, and regulators certainly do not.

And unfortunately, consumers are not usually the best about managing their debt all the time. 

I think the intent of the loans at Chime was different. The loan program through Chime was more about, "Oh, I need $100 to buy my groceries." It wasn't tied to a specific purchase of clothes or furniture or whatever. I mean, Chime probably wouldn't have known what you used it for, but I think the amounts are meant more for these one-off, medium-size purchases.

Genuinely, I think that people at Chime did want to build products that helped people. They had the idea that loans were helping because they did a lot of user feedback research, and people were always saying, "It'd be so convenient to get a couple extra a hundred bucks before my next paycheck comes because I've run low and I've got to pay for this." They had some really cool user stories about that. People who ran out of money to buy groceries for the end of the month and using this instant loan feature helped them make ends meet for an extra two weeks until their next paycheck came.

I think that is a much more palatable and pro-consumer tool versus a, "Hey, maybe you can't afford to buy a TV now, but you can get a BNPL loan and buy it anyway." That felt a little more—I don't want to call it skeevy, but toeing the line of being good for consumers or not.