Jan 21, 2021 - Economy

Scoop: Chime's fee income

Illustration of an atm machine surrounded by a growing pile of money. 

Illustration: Aïda Amer/Axios

Chime, a fast-growing online bank most recently valued at $14.5 billion, derives about 21% of its revenue from fees its customers pay for using out-of-network ATMs, according to financial data obtained by Axios.

Why it matters: Banking alternatives like Chime aggressively market themselves to consumers who have been burned too often by bank fees. Chime claims it has "no hidden bank fees," while Varo advertises itself as "online banking with no fees."

By the numbers: Chime's annual gross revenue per user was $208 as of June 2020, according to data Axios obtained. While most of that came from debit card interchange fees, 21% came from charging customers for using out-of-network ATMs.

  • Chime charges $2.50 per out-of-network ATM cash withdrawal, on top of any fee charged by the bank operating the ATM — though it waives that fee for the first such transaction.

Between the lines: Varo, which also charges a $2.50 fee for using out-of-network ATMs, said that it charges the fee "because other ATM networks and big banks charge us."

  • Yes, but: Those "ATM interchange" fees are normally on the order of 10 cents, not $2.50, according to two industry sources.
  • How it works: Most traditional banks charge out-of-network ATM fees as part of their attempt to keep fee income on checking accounts growing.

What they're saying: "A small percentage [of our revenue] comes from fees derived from out-of-network ATMs," Chime told Axios in a statement, adding that its customers can currently access more than 38,000 fee-free ATMs.

  • The company did not share any details about which of its customers are incurring the most fees, or why, nor how it priced its fee.
  • They added: "This is the only fee on the account and we disclose this on our website." (You might want to see for yourself how far you need to scroll down that page before you find the fee being disclosed.)

The bottom line: Digital banks generally sell themselves as competing on a basis of low costs and no fees, making all their revenue from swipe fees on purchases. But they're still making hundreds of dollars a year from some of their customers by charging them to use out-of-network ATMs.

Go deeper