How Does Chime Make Money? The Hidden Truth Behind Digital Banking [2025]

How does Chime make money without charging monthly fees? The digital banking platform has resonated with consumers, serving over 22 million users and processing $121 billion in payments during the 12 months ending March 2025.

Chime's revenue comes mostly from interchange fees, which make up over 72% of what they earn. Traditional banks rely on customer fees, but Chime takes a small cut each time users swipe their Chime-issued Visa cards. This strategy has paid off well. The company turned its first profit in Q1 2025 after growing revenue by 30% in 2024.

The company stands out because it doesn't charge the fees that traditional banks need. Traditional financial institutions get 12.8% to 18.2% of their non-interest income from deposit account fees. Chime has eliminated monthly maintenance fees, overdraft fees, and minimum balance requirements. They even offer up to $200 in fee-free overdrafts through SpotMe. On top of that, their strategic collaborations give customers access to over 50,000 fee-free ATMs.

This piece will dive into Chime's revenue streams, show how its reliable infrastructure creates a fee-free experience, and compare its approach to traditional banks. You'll learn how this fintech company reached a multi-billion-dollar valuation while meeting its mission to help members improve their finances.

What is Chime and how does it work?

Chime is a financial technology company that provides banking services through partner banks instead of being a bank itself. This 10-year old company has grown faster by offering a digital-first approach to banking. The company provides customer-friendly features and minimal fees. Let's learn about how Chime makes money by looking at its unique business structure and how it works.

Chime is not a bank: Understanding its fintech model

Chime works as a financial technology (fintech) company that creates innovative banking products through partnerships with regulated financial institutions. This difference is significant - Chime creates the technology, user experience, and features but doesn't hold customer deposits or provide banking services directly. The company connects users with banking services through its technology platform.

As a neobank (or challenger bank), Chime runs completely online without physical branches. The digital-only model lets the company offer services with substantially lower costs than traditional banks. Chime targets a specific group - people in their late 20s to early 30s who earn less than $100,000 per year. The company serves customers who use debit cards for daily purchases rather than those with premium credit cards.

Partner banks and FDIC insurance

Chime keeps customer funds secure through partnerships with two FDIC-insured institutions: The Bancorp Bank, N.A. and Stride Bank, N.A. These partnerships focus on risk management, compliance, and consumer protection.

All deposits made through Chime stay in FDIC-insured accounts at these partner banks. This provides protection up to $250,000 per depositor. The insurance works just like coverage at traditional banks and protects customers if banks fail. All but one of these account holders have kept their money safe since the FDIC started in 1933.

Chime keeps an open relationship with its partner banks and gives them direct access to customer balance records. Partner banks check accounts daily to ensure accuracy. Chime helps resolve any differences that come up.

Key features of Chime accounts

Chime's distinctive account options show its customer-focused approach:

• Checking Account: No monthly fees, no minimum balance requirements, and access to over 50,000 fee-free ATMs nationwide. This account comes with a Chime Visa® Debit Card that works with mobile payment options like Apple Pay and Google Pay.

• High-Yield Savings Account: You get 1.25% APY (Annual Percentage Yield). Chime+ members receive 3.75% APY with qualifying direct deposits - about 9 times the national average.

• Credit Builder Account: A secured credit card option without fees or interest that helps members build credit history with major bureaus.

Chime stands out with customer-friendly features. Members can access direct deposits up to two days early, get fee-free overdraft protection up to $200 through SpotMe (with qualifying direct deposits), and use automated savings tools. These features have brought millions of customers who traditional banks might have overlooked.

How does Chime make money?

Chime makes money differently than regular banks that depend on customer fees. The company found a way to earn while giving free services to millions of users.

The role of interchange fees

Chime makes most of its money through interchange fees, which bring in about 80-90% of total revenue. These interchange fees (also called swipe fees) cover electronic processing costs for debit or credit card transactions. The company's S-1 filing confirms this, stating "We earn the substantial majority of our revenue through interchange-based fees from debit and credit card transactions".

Chime made $349 million in transaction profit on $519 million revenue in Q1 2025—showing a 67% transaction margin. This was much higher than $236 million in Q1 2024, though the transaction margin dropped from 79% as they added new features.

Why merchants pay and not users

The smart part of Chime's business model puts fees on merchants instead of users. Merchants pay Visa a processing fee whenever someone buys something with their Chime Visa Debit Card. This lets Chime stay user-friendly with no monthly fees, minimum balances, or in-network ATM charges.

This approach changes traditional banking completely. Chime says it well: "While old banking platforms and business models rely on punitive fees, Chime's business model is based on interchange fees—the fees merchants pay to accept card payments".

This strategy lines up Chime's success with its users' interests. One analysis points out, "Chime's incentive is aligned with the member: they win when people swipe, not when people slip". Chime needs people to use their cards often—users averaged 54 transactions monthly in Q1 2025.

How Chime earns from every swipe

Here's how interchange fees work:

1. A customer makes a purchase using their Chime debit card

2. The merchant pays an interchange fee to Visa for processing the payment

3. Visa takes its cut of the fee

4. The issuing bank (Chime's partner banks) receives the largest portion

5. Chime receives a meaningful share through its bank partnerships

Chime gets much of these fees because they handle customer operations: building the app, getting users, stopping fraud, and helping customers. Partner banks just manage regulatory requirements.

Chime also makes about 21% of its revenue from out-of-network ATM fees. This creates a second major income stream.

Relying on interchange revenue comes with risks. The S-1 filing states that "Changes in rules and practices regarding interchange fees, card network fees, and other fees and assessments may adversely affect our business". Chime also needs its partner banks to keep their small issuer exemption from the Durbin Amendment's limits on debit card interchange fees.

Chime's digital platform costs less to run than traditional banks. Chime explains: "As a financial technology company, we operate at a much lower cost. This lets us provide affordable, innovative services that consumers need".

Other revenue streams beyond interchange

Interchange fees are the foundations of Chime's revenue model. The digital banking platform has created multiple income streams to build a lasting business. These additional channels support the main interchange revenue and help Chime keep most customer services free of charge.

ATM fees from out-of-network usage

Chime gets more revenue through ATM fees when customers use machines outside their network. Users pay $2.50 for each transaction they make at non-Chime ATMs or when they get cash advances at banks [29, 30]. These ATM fees make up about 21% of Chime's total revenue.

Chime has built strategic collaborations with ATM operators like MoneyPass, Allpoint, and Visa Plus Alliance. This gives customers access to more than 50,000 fee-free ATMs across the country. The company can offer easy cash access to customers and still earn money from those who use ATMs outside their network.

Interest on customer deposits

Beyond ATM fees, Chime makes money from interest earned on customer deposits in spending and savings accounts. The company's banking structure allows them to invest or lend out money that customers deposit into their Chime accounts.

The company earns more interest from these investments than what they pay their customers. This difference, known as the "spread," becomes pure profit for Chime. The company makes use of information from this traditional banking model even as a fintech platform rather than a regular bank.

Partnerships and referral programs

The company's referral program adds another stream of income. Current Chime members can earn rewards by getting friends and family to join. New users who sign up through a referral link must receive a qualifying direct deposit of $200 or more within 45 days. Both parties then get rewards.

New members usually get $100, while referring members can earn up to $200 based on ongoing promotions. Members can refer up to 10 people each year. This program brings in new customers and rewards loyal ones at the same time.

Chime shows its steadfast dedication to transparency by stating, "We rely on interchange fees for most of our income and intentionally limit the fees that members pay". This approach strikes a chord with customers looking for different options than traditional banking fee structures.

How Chime keeps services free for users

Chime maintains its fee-free banking services by cutting costs and running efficient digital operations. The company knows how to eliminate traditional banking fees

through its innovative infrastructure and operations.

No monthly maintenance or overdraft fees

Chime has eliminated common banking fees that generate much revenue for traditional financial institutions. The company charges no monthly maintenance fees, minimum balance fees, or overdraft fees. Traditional banks get 12-18% of their non-interest income from deposit account service charges.

SpotMe, one of Chime's most popular features, gives users fee-free overdraft protection up to $200. Users need $200 in monthly direct deposits to their Chime checking account to qualify. SpotMe has covered more than $32 billion in transactions since 2019. This helps millions of users avoid overdraft fees. Chime simply declines transactions that would exceed the SpotMe limit without charging fees.

Chime's lean digital infrastructure

Chime saves money by operating digitally instead of maintaining physical branches. The company doesn't need to pay for real estate, utilities, security, or branch staff.

The company optimizes operations through automation and self-service tools. Customer support costs have dropped remarkably - 68% of support tickets get resolved without human interaction. These improvements will cut support costs per user by 60% between 2022 and 2025.

Chime's mutually beneficial alliances with retailers like Walgreens, CVS, Walmart, and 7-Eleven create a network that's bigger than any traditional bank's physical locations in the U.S.. Users get convenient cash deposit options while Chime avoids running its own ATM networks.

ChimeCore and backend efficiency

Chime launched ChimeCore, its proprietary payment processor and ledger system, in 2024. This infrastructure investment brings several benefits:

• Less dependence on third-party processors

• Better control over profit margins

• Faster product development and settlement flows

• Improved fraud detection and risk modeling

Chime's engineering team has optimized their backend systems to minimize costs. They built a custom NAT instance solution that saved them millions on their AWS bill. Their approach eliminated data processing charges while keeping security and reliability intact.

The team upgraded their core database with just 5 minutes of downtime. This improved maintainability and avoided monthly extended support costs. These infrastructure improvements are vital since "nearly every service Chime provides relies on a service that connects to this DB".

These technical improvements and smart design choices help Chime run a lean operation that supports its fee-free business model.

Chime vs traditional banks: A business model comparison

Chime and traditional banks operate with completely different business models and ways to make money.

Fee structures and customer effect

Traditional banks make most of their money from customer fees. Bank of America charges around $72.67 per customer annually, while Chase customers pay about $91.68. Chime takes a different path by removing most banking fees. Their customers don't pay monthly maintenance, overdraft, minimum balance, paper statement, returned check, or electronic transfer fees. The only cost Chime customers face is a $2.50 fee when they use ATMs outside their network.

These different fee policies hit customers' wallets differently. Young Gen Z customers at traditional banks shell out more than $19 monthly. Millennial customers pay close to $17 each month. Baby Boomers get a better deal and pay just $2.21 monthly at these banks.

Revenue dependency differences

Traditional banks build their business model on net interest margins. They get almost 70% of their money from customer deposits and lending. This strategy works well for wealthy customers who keep large deposits, but it doesn't work for everyday Americans who live paycheck-to-paycheck.

Chime's revenue comes mostly from interchange fees, which make up 76% of what they earn. This creates a different motivation: Chime makes money when their customers use their cards, not from their financial mistakes. Their success depends on how much their customers use their services rather than collecting fees.

Why Chime strikes a chord with younger users

Young people love Chime's digital-first approach. Millennials and Gen Z prefer to handle their money electronically. Many of them leave traditional banks - 44% of Gen Z switched their banking relationships in the last year.

Young customers move to Chime for several reasons. The no-fee model solves their frustrations with traditional banking costs. Their mobile-first platform matches what digital natives want. Features like early direct deposit access and SpotMe overdraft protection help solve young people's money challenges.

Conclusion

Chime earns 76% of its total revenue through interchange fees from customers who use their Chime-issued Visa cards. This fee-based model shows a fundamental change from traditional banking. On top of that, it makes about 21% from out-of-network ATM fees and earns more through interest on customer deposits.

Traditional banks depend on monthly maintenance fees, overdraft penalties, and minimum balance requirements. But Chime has built an eco-friendly business model that arranges with what customers need. The company makes money when users swipe their cards, not when they make financial mistakes. Chime keeps its operational costs by a lot lower than traditional banks thanks to its lean digital setup - no physical branches, automated customer support, and systems like ChimeCore.

So Chime has drawn millions of users, especially when you have Millennials and Gen Z who love the transparent, fee-free banking approach. The company reached its first profit in Q1 2025 after growing revenue by 30% in 2024. This proves digital banking platforms can succeed without charging extra fees from customers.

Chime might face risks from changes in interchange fee rules. However, its diverse revenue streams and quick operations set it up well for future growth. Of course, Chime shows that financial services can be both customer-friendly and profitable. This creates a win-win situation where the company grows when users actively participate with their accounts instead of making financial mistakes.

FAQs

Q1. How does Chime generate revenue without charging fees?

Chime primarily earns money through interchange fees, which are small charges paid by merchants when customers use their Chime debit cards for purchases. This allows Chime to

offer fee-free services to its users while still generating revenue.

Q2. What are the potential drawbacks of using Chime?

While Chime offers many fee-free services, users may incur charges for out-of-network ATM withdrawals ($2.50 per transaction). Additionally, cash deposits can only be made at specific partner locations, which may be inconvenient for some users.

Q3. How does Chime's business model differ from traditional banks?

Unlike traditional banks that rely heavily on customer fees and interest from loans, Chime's revenue primarily comes from interchange fees when customers use their cards. This aligns Chime's interests with frequent card usage rather than charging penalties for financial missteps.

Q4. Why is Chime particularly appealing to younger users?

Chime's digital-first approach, lack of traditional banking fees, and features like early direct deposit access resonate strongly with Millennials and Gen Z. These demographics appreciate the transparent, mobile-friendly banking experience that aligns with their financial needs and preferences.

Q5. Is Chime a bank, and are customer deposits insured?

Chime is not a bank itself but a financial technology company that partners with FDIC-insured banks. All deposits made through Chime are held in FDIC-insured accounts at partner banks, providing protection of up to $250,000 per depositor, just like traditional banks.