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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

Banks cash in as Wall Street blows out Main Street

Illustration: Aïda Amer/Axios

America’s big banks capped off a winning year, led by soaring Wall Street-facing business lines.

Why it matters: Banks cashed in on the white-hot IPO market, record debt issuance, and sky-high trading volume — all of which played out as economic peril softened the consumer side of their businesses.

$1.2 trillion "hard" infrastructure bill clears major procedural vote in Senate

Photo: Kevin Dietsch/Getty Images

The Senate voted 67-32 on Wednesday to advance the bipartisan $1.2 trillion infrastructure bill.

Why it matters: After weeks of negotiating, portions of the bill remain unwritten, but the Senate can now start debating the legislation to resolve outstanding issues.

Fed chair says he isn't concerned by Delta surge

Fed Chairman Jerome Powell at the G20 finance ministers and central bankers meeting in Venice last month. Photo: Andreas Solaro/AFP via Getty Images

One of the country's most influential economic officials doesn't anticipate that surging coronavirus cases will knock the reopening recovery off course.

What he's saying: "There has tended to be less economic implications from each [coronavirus] wave. We'll see if that's the case for the Delta variety," Federal Reserve Chairman Jerome Powell told reporters today.