3 Main Ways How Does Chime Make Money (2023)

Written By Branson Knowles

In the world of fintech companies, Chime stands out. They’re one of the biggest banking apps out there with a user base of over 13 million people. Many users love Chime and what it provides, but wonder; how does a free neobank like Chime make money?

Chime offers many of their services for free to increase their user base and then make money through a portion of transaction fees charged to merchants. They also raise capital from investors to fund the growth and collect fees from out-of-network ATM withdrawals. 

Whenever someone can offer you something like a bank account for free, it’s probably because they’re making money on the side or somewhere else. This is exactly the case for Chime; they’re able to offer solid checking and savings accounts for free because they collect elsewhere.

While Chime may charge fees for out-of-network ATM transactions, they will never charge you a fee for being overdrawn.

This is a relatively new change, as just a couple of years ago almost every bank had some fee associated with being overdrawn, usually around $34 each time.

You will never pay Chime, fee, or otherwise if you use your account wisely. Sure, you can use an ATM to grab cash from your Chime account and pay a fee, or you can apply for the free Chime debit card and use that to access your balance instead.

Chime even has features like SpotMe, a feature designed to let customers overdraw their accounts up to $200.

If they really made money from fees from customers, I doubt they would let them overdraft so much without a fee. 

chime overdraft fee free

From everything I’ve seen from researching for topmobilebanks.com about Chime and everything I’ve seen using the actual Chime app, it seems to be a reputable company that makes its money in a pretty similar fashion to both traditional banks and their fellow neobanks alike.

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How Does Chime Make Money through Transactions Fees Charged to Merchants

I know what you’re thinking; how does Chime make money on transaction fees when you, as a Chime customer, don’t pay any fees to use their service?

It would make sense if it cost you a dollar every time you used your card, but Chime users don’t have fees like that.

Sure, Chime users don’t have fees for using their debit cards, but merchants do.

To use Chime’s system to process a payment, Chime charges merchants a small percentage (or a flat rate, depending) of the total of their transactions.

It’s a fair system, merchants get to use Chime’s system to receive their funds, Chime gets paid for their services, and you as a Chime user get to use your Chime card for free to buy your favorite items. 

Again, merchants don’t pay much for this service.

Chime usually charges them somewhere around 1.5% of the total of the transaction. It may not seem like much, but every merchant across the country who uses Chime pays that fee, so it adds up after a while. 

You should never be paying a fee on your end to use Chime either.

The service is free for users, allowing you to pay through Chime with the Chime debit card and dodging any and all transaction fees through the fintech company.

How Does Chime Make Money through Raising Capital?

Chime is a private company, meaning it isn’t publicly traded on the stock market.

Private companies, like Chime, often raise funds through private investors, giving a select group of people an opportunity to become invested in the company.

Publicly traded companies issue shares to be sent to the stock market where any investor, amateur or professional, may buy and sell the stock when they see fit. Chime isn’t on any public trading platform, and to get a piece of their pie you must be an accredited investor.

According to Crunchbase, Chime has raised over $2.3 billion dollars as of August of 2021, their last round of funding.

They underwent nine separate funding rounds to achieve this dollar amount, relying on a group of 6 lead investors out of a total of 31 according to the site. 

Chime hasn’t undergone a round of fundraising in over a year and a half.

This might mean that they aren’t looking to private investors for funds anymore.

Instead, they might be a little more reliant on their own ability to generate revenue from their other methods.

Overall, Chime as a company is worth well over $20 billion dollars, this number coming from a multitude of sources from 2021.

Again, it has been quite some time since this fintech company was valued so who knows what its real worth is now. 

How Does Chime Make Money through Out-of-Network ATM Fees?

Chime’s last big stream of income is from out-of-network ATM fees.

Just about every bank has them; bank’s usually have both in-network and out-of-network ATMs, meaning they have some ATMs where you don’t have to pay a fee but if you use another one that isn’t in that network you’re on your own.

When I worked at Chase Bank, the premise was similar.

Chase has thousands of ATMs across the country, and if you’re a Chase customer you can use any of these ATMs for free. If you want to pull out cash from a non-Chase ATM though, you have to pay a fee.

ATM related fees are usually small, never more than a couple of dollars.

Chime’s is in the range, coming in at $2.50 if you want to withdraw from an ATM that isn’t in their network. 

You shouldn’t have to make a withdrawal from an ATM that’s out of their network.

Chime boasts one of the largest ATM networks I’ve ever seen, connecting their users to over 60,000 ATMs across America.

That’s fee-free banking at nearly 6 figures worth of locations. 

You can also use your Chime debit card to pay for your transactions instead of having to get cash from an ATM.

If you’re getting cash from an ATM not in Chime’s network, it means you have a debit card to do so.

Skip the machine and use your debit card directly with the cashier.

Getting cash straight from a cashier is another easy way to avoid paying a fee with Chime.

If you’re already heading to the store looking to make a purchase, ask the cashier for cash back.

They’ll charge your account the amount of your purchase plus however much you wanted in cash back, making your cashback withdrawal free.

Overall, there are several ways to avoid Chime’s out-of-network ATM fee.

You can grab cash from one of their in-network machines, pay with your Chime card directly, or ask the cashier at the retail store you’re at to give you cashback with your transaction.

What Are the Cons of Chime?

As with any online bank, there are going to be some negatives to using Chime.

It’s an online-only banking account, meaning there are no physical locations for you to go to if you ever want to talk to someone in person.

After working for Chase Bank for so many years, I learned the value of talking to someone in person.

It’s hard to be connected to the right person over the phone, especially when your problems are hard to explain and even harder to fix.

I would have customers come in to sit with me to fix their problems all the time, even when they could have fixed their problems on their own or over the phone with one of Chase’s customer service agents. 

chime close my account

There’s just something about sitting down and looking at another human face-to-face that you just can’t beat.

You feel like your problems are being listened to, and you feel like a solution is that much easier to reach.

Talking to someone on the phone can feel distant, and one person may not even be able to help you.

More often than not, when you’re looking for customer support over the phone, you have to be redirected to a ton of different people.

That’s not helpful, or at least it doesn’t feel like it. 

Chime, like any online bank, has the problem of not having any in-person locations for their customers. While you can do everything online, through Chime, you sort of have to. 

What Are the Requirements to Use Chime?

People looking to open accounts with Chime are often curious about the requirements.

A lot of traditional banks have strict requirements, making their customers have several forms of IDs and good credit to open an account with them. 

Chime will require your first and last name, social security number, and your email with a password for your new account with Chime. 

chime account edit

Chime requires this information to remain in compliance with government regulations.

They also check to see if you’re in good standing with other banks. If you have a history of overdrafting your account or not paying back debts, Chime may not let you open an account with them. 

They will also ask for your birthday as well as a physical address. You’ll need both to open an account through Chime. 

How Does Chime Pay You Early?

If you use direct deposit through Chime, you may be seeing your paycheck arrive a couple of days earlier than expected.

Chime can actually get you your money up to 2 days early, giving you your paycheck days before payday.

chime move your direct deposit

Customers often wonder how Chime does it.

It’s a good question; how does your bank know how much you’re going to get paid?

Chime doesn’t know how much you’re making unless your payroll company reached out to them early.

Most companies pay their employees for their work a couple of weeks after they do it. That’s to ensure hours are reported correctly and everything lines up. 

If you have a job like this, your payroll company can actually let Chime know what you’re going to make before you receive your check.

Once Chime knows how much you’ll be getting, and when you’re getting it, they can send you your money early.

Not every direct deposit recipient is eligible for this feature.

Chime only lets a certain portion of their customers receive their deposits early.

These customers must be in good standing with Chime and their payroll companies must report their wages to Chime days in advance. 

All fee-free services like getting paid early, and others that Chime offers, help them to attract money to their system and then make money from merchant and ATM fees.

More Useful Articles About Banking With Chime

About the Author

Lead Researcher, Digital Banking in the U.S. at TopMobileBanks

Branson Knowles is a former banker and current writer at TopMobileBanks.com.

During his years banking, he helped his clients discover their financial freedom through smart savings and spending goals. He started as a teller before becoming a banker and obtaining his federal licenses, furthering his clients' on their financial journeys.

After becoming one of the top producing bankers in the state, Branson decided it was time to pursue his own financial freedom. He started writing freelance finance articles before joining TopMobileBanks.com, breaking down banking like only an ex-banker could.

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