Company:Chime

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Short description: American financial services company
Chime Financial, Inc.
TypePrivate
IndustryFinancial services
Founded2012; 12 years ago (2012)
FoundersChris Britt and Ryan King[1][2]
HeadquartersSan Francisco, California , United States
Key people
  • Chris Britt (CEO)
  • Ryan King (CTO)
ProductsChecking accounts, savings accounts, debit cards, p2p, credit cards, fee-free overdraft
RevenueIncrease US$200 million (2019)[3]
Total assetsIncrease US$5.8 billion (2019)[3]
Websitechime.com

Chime Financial, Inc. is a San Francisco–based financial technology company that partners with regional banks to provide certain fee-free[4][5] mobile banking services. The company offers early access to paychecks, negative account balances without overdraft fees,[2] high-yield savings accounts,[5] peer-to-peer payments,[6] and an interest-free secured credit card.[7] Chime earns the majority of its revenue from the collection of interchange fees on debit card transactions.[8]

Chime is not a bank and Chime customers do not have a customer relationship with its banks. Chime can and does cancel user accounts without notice; moreover, it is not required to provide a reason for the cancellation to the customer or even have a reason. Customers cannot appeal to banking regulators to retrieve their deposits, which may not be returned in a timely fashion.[9][10]

History

Chime headquarters in San Francisco, California

Chime was founded by Chris Britt (CEO) and Ryan King (CTO) in 2012 [11] in San Francisco , California as an alternative to traditional banking with a mission of creating financial peace of mind.[12] The company launched on April 15, 2014, on the Dr. Phil Show.[13] As of 2020, Chime has raised $1.5 billion in private funding and in 2022 was named one of Fortune's Best Places to Work.[14][15]

Chime provides mobile banking services via its bank partners without monthly or overdraft fees, and it does not require an opening deposit or minimum balance to open a free checking account.[5]

In 2018, Chime acquired Pinch, a startup focused on helping millennials and young adults build their credit scores by reporting on-time rent payments to credit bureaus. Pinch's co-founders joined Chime's team as a part of the acquisition.[16]

On October 16, 2019, Chime experienced a service outage leaving users without access to their deposits. The issue was resolved the next day.[17]

In January 2020, Chime announced a partnership with the Dallas Mavericks as their jersey sponsor as a part of a multi-year deal.[18] Chime had 8 million account holders in February 2020.[19]

In April 2020, in response to the financial strain of the COVID-19 pandemic, Chime announced a pilot program to provide users who e-filed tax returns with the IRS a $1,200 advance on the Economic Stimulus Payment via SpotMe, Chime's fee-free overdraft product.[20] Chime later announced the successful processing of over $375,000,000 in stimulus payments one week ahead of the scheduled government disbursement date.[21]

In September 2021, Chime closed a deal for the largest office space that year in San Francisco, with nearly 200,000 square feet across six floors.[22]

In February 2022, Chime along with Meta Platforms sued 2 Nigerians accused of impersonating Chime on social media platforms.[23]

In February 2022, sources reported Chime would delay its IPO until later in 2022.[24]

The company confirmed media reports that it was terminating 12% of its workforce in November 2022.[25]

Funding

In August 2021, Chime Financial raised $750 million in a series G funding round, led by investor Sequoia Capital Global Equities.[26] This values the company at about $25 billion.[26]

Consumer and regulatory problems

Marketing as a bank

Chime, which is not a bank, in 2021 came to agreements with two state financial regulators, the California Department of Financial Protection and Innovation and the Illinois Department of Financial and Professional Regulation, to stop representing itself as a bank. The company agreed to stop using the URL "chimebank.com", change its use of the word "bank" in marketing, and add disclaimers to its marketing and product text. It paid $200,000 in the settlement with Illinois.[27][28][29][30]

Account closures, difficulty recovering deposits

In July 2021, ProPublica published an article detailing Chime's record of closing customer accounts without notice or explanation, sometimes refusing to return customer deposits.[10] Chime has attributed the closures to the accidental byproduct of fraud prevention.[10]

In 2022 Chime's practice of closing customer accounts without notice or explanation was again reported. The company has no obligation to provide a reason, or even have a reason, to close an account. As of the November, 2022 report the Consumer Financial Protection Bureau had received 3,500 complaints about Chime since the beginning of 2020. Customers with closed accounts sometimes had difficulty retrieving their deposits in a timely fashion. Since Chime customers are not customers of any bank, their recourse is often limited.[9][28]

Products

Chime debit card

Chime offers various fee-free banking products, including checking accounts with no minimum balance, an automated savings feature, and early wage access.[31]

In September 2019, Chime launched SpotMe, a fee-free overdraft service where customers can overdraw their accounts up to $100 without incurring an overdraft fee; once the overdraft limit is reached, purchases will be declined but no traditional negative balance fees charged.[32]

Chime launched Credit Builder with Stride Bank, N.A in June 2020, which is a credit card designed to help consumers build their credit history.[33] Chime was the most downloaded digital banking app in the U.S. during the first half of 2021, according to data collected by Apptopia.[34]

Customer service

(As of July 2023), Chime has a 'B-' rating from the Better Business Bureau (BBB).[35] This rating is due to the BBB receiving 7,957 complaints about Chime during the previous 3 years, the company failed to respond to at least 10 complaints, and the length of time the business takes to respond to complaints.[36]

Chime employs customer service representatives that can be reached by phone 24 hours per day, 7 days a week. Customers can also reach the company agents via the live chat.

Chime has no physical branches and does not charge monthly or overdraft fees, nor does it require an opening deposit or minimum balance to open a free checking account.[37] As of February 2020, Chime had 8 million account holders.[38] Bank accounts that are provided via Chime's partners are FDIC insured up to the standard maximum deposit insurance amount of $250,000.[39][40][5] So far the accounts are only available for individuals of personal accounts; all money received must be in the name of the individual account owner.

Chime can close user accounts with no notice, it is not required to provide a reason for the cancellation to the customer. Chime's partner banks have a duty under “know your customer” rules to guard against money-laundering or other suspicious activity, including closing down suspicious accounts.[9][10]

See also

References

  1. ↑ Maria Deutscher,"Mobile banking startup Chime lands $485M mega-round at $14.5B valuation". siliconangle.com. 18 September 2020. https://siliconangle.com/2020/09/18/mobile-banking-startup-chime-lands-485m-mega-round-14-5b-valuation/. Retrieved 23 April 2015. 
  2. ↑ 2.0 2.1 "25. Chime". cnbc.com. 16 June 2020. https://www.cnbc.com/2020/06/16/chime-disruptor-50.html. Retrieved 23 April 2015. 
  3. ↑ 3.0 3.1 Fuscaldo, Donna (December 5, 2019). "Digital Bank Chime Now Has a Valuation of $5.8 Billion". https://www.forbes.com/sites/donnafuscaldo/2019/12/05/digital-bank-chime-now-has-a-valuation-of-58-billion/. 
  4. ↑ "Everything You Need to Know About Banking With Chime" (in en). Entrepreneur. https://www.entrepreneur.com/business-news/everything-you-need-to-know-about-banking-with-chime/395534. 
  5. ↑ 5.0 5.1 5.2 5.3 Rowan, Lisa (2021-08-26). "Chime Review" (in en-US). https://www.forbes.com/advisor/banking/chime-review/. 
  6. ↑ "Digital Banking Challenger Chime Now Allows Users to Send Money to “Anyone and Everyone”" (in en). Crowdfund Insider. https://www.crowdfundinsider.com/2021/04/174311-digital-banking-challenger-chime-now-allows-users-to-send-money-to-anyone-and-everyone/. 
  7. ↑ "Best credit cards for rebuilding your credit of August 2023" (in en). USA Today. 2023-08-23. https://www.usatoday.com/money/blueprint/credit-cards/best-credit-cards-for-rebuilding-credit/. 
  8. ↑ "Online bank Chime is said to near funding at $1.5 billion value" (in en). 6 February 2019. https://www.americanbanker.com/articles/online-bank-chime-is-said-to-near-funding-at-15-billion-value. 
  9. ↑ 9.0 9.1 9.2 Zimmermann, Stephanie (November 25, 2022). "Closed accounts, no money: Chime app users complain they were suddenly shut out of their online accounts" (in en). Chicago Sun-Times. https://chicago.suntimes.com/2022/11/25/23473765/chime-fintech-neobank-app-account-consumer-financial-protection-bureau-cfpb. 
  10. ↑ 10.0 10.1 10.2 10.3 Kessler, Carson (July 6, 2021). "A Banking App Has Been Suddenly Closing Accounts, Sometimes Not Returning Customers' Money" (in en). ProPublica. https://www.propublica.org/article/chime. 
  11. ↑ "Chime About Us" (in en). https://www.chime.com/about-us/. 
  12. ↑ "Meet the Team: Product at Chime" (in en). 12 January 2022. https://medium.com/life-at-chime/meet-the-team-product-at-chime-204e613f8a03. 
  13. ↑ McGraw, Phil (April 15, 2014). "Dr. Phil Surprises a Guest Preparing for a New Baby". https://www.youtube.com/watch?v=JtdDPszN8nY. 
  14. ↑ "Chime is now worth $14.5 billion, surging past Robinhood as the most valuable US consumer fintechs" (in en). 18 September 2020. https://www.cnbc.com/2020/09/18/chime-is-now-worth-14point5-billion-surging-past-robinhood-as-the-most-valuable-us-consumer-fintech-.html. 
  15. ↑ 75 Best Small and Medium Workplaces in the Bay AreaFortune (magazine)
  16. ↑ "Mobile bank Chime picks up credit score improvement service Pinch in all-stock deal". https://social.techcrunch.com/2018/09/14/mobile-bank-chime-picks-up-credit-score-improvement-service-pinch-in-all-stock-deal/. 
  17. ↑ Son, Hugh; Rooney, Kate (October 17, 2019). "Mobile bank Chime goes dark for millions of customers as it seeks $5 billion valuation". https://www.cnbc.com/2019/10/17/digital-bank-chime-goes-dark-for-millions-of-customers.html. 
  18. ↑ Rader, Doyle. "Dallas Mavericks Announce Multi-Year Partnership With Chime As Jersey Sponsor". https://www.forbes.com/sites/doylerader/2020/01/17/dallas-mavericks-chime-bank-new-jersey-sponsor-patch/. 
  19. ↑ "Chime has hit 8 million accounts and is now offering a 1.6% interest rate on savings products". https://www.businessinsider.com/chime-cracks-8-million-account-milestone-2020-2. 
  20. ↑ Son, Hugh (April 2, 2020). "Chime pilots way to get $1,200 stimulus checks to users instantly after talks with Mark Cuban". https://www.cnbc.com/2020/04/02/chime-bank-pilots-way-to-get-1200-stimulus-checks-to-users-instantly.html. 
  21. ↑ "#ChimeCARES Update: Initial stimulus payments have been received. More on the way. | Chime". April 10, 2020. https://www.chime.com/blog/getting-americans-faster-access-to-covid-19-stimulus-payments/. 
  22. ↑ Done deal: Chime signs the largest new San Francisco lease of the year at downtown skyscraperSan Francisco Business Times
  23. ↑ "Meta and Chime sue Nigerians behind Facebook, Instagram phishing" (in en-US). https://www.bleepingcomputer.com/news/security/meta-and-chime-sue-nigerians-behind-facebook-instagram-phishing/. 
  24. ↑ "With Fintech Stocks Down 40%, Chime Delays Its IPO" (in en-US). https://www.forbes.com/sites/jeffkauflin/2022/02/18/with-fintech-stocks-down-chime-delays-ipo-to-second-half-of-2022/?sh=13fcd28547ca. 
  25. ↑ León, Riley de (3 November 2022). "Chime cuts 12% of its workforce, adding to recent wave of tech layoffs" (in en). CNBC. https://www.cnbc.com/2022/11/03/chime-cuts-12percent-of-its-workforce-adding-to-recent-wave-of-tech-layoffs.html. 
  26. ↑ 26.0 26.1 Corrie Driebusch & Peter Rudegeair,"Chime Financial Raises $750 Million in Latest Funding Round" (in en-US). 2021-08-13. https://www.wsj.com/articles/chime-financial-raises-750-million-in-latest-funding-round-11628872069. 
  27. ↑ "California Prohibits Fintech Chime From Calling Itself a Bank" (in en). Bloomberg Law. May 5, 2021. https://news.bloomberglaw.com/banking-law/california-prohibits-fintech-chime-from-calling-itself-a-bank. 
  28. ↑ 28.0 28.1 Zimmermann, Stephanie (September 30, 2022). "Chime refunds $977 amid Sun-Times questions, as neo-bank apps face thousands of consumer complaints" (in en). Chicago Sun-Times. https://chicago.suntimes.com/2022/9/30/23380015/chime-financial-spotme-app-fintech-neobank-national-consumer-law-center-cfpb-stride-bancorp. 
  29. ↑ Rosenberg, Eli A. (May 27, 2021). "Whose "Bank" is it Anyway? State Enforcement Actions Against Chime Underscore the Pitfalls of Using "Bank" Terminology". Baird Holm Attorneys at Law. https://www.bairdholm.com/blog/whose-bank-is-it-anyway-state-enforcement-actions-against-chime-underscore-the-pitfalls-of-using-bank-terminology/. 
  30. ↑ "Chime has agreed to stop using the word "bank," after a California regulator pushed back" (in en-US). https://social.techcrunch.com/2021/05/05/chime-has-agreed-to-stop-using-the-word-bank-after-a-california-regulator-pushed-back/. 
  31. ↑ Green, Rachel. "Chime's recent earnings marks the largest single equity investment in a neobank". https://www.businessinsider.com/chime-earns-another-win-in-growth-trajectory-2019-12. 
  32. ↑ "Chime now has 5 million customers and introduces overdraft alternative" (in en-US). https://social.techcrunch.com/2019/09/04/chime-now-has-5-million-customers-and-introduces-overdraft-alternative/. 
  33. ↑ "US challenger bank Chime launches Credit Builder, a credit card that works more like debit". https://techcrunch.com/2020/06/30/u-s-challenger-bank-chime-launches-credit-builder-a-credit-card-that-works-more-like-debit/. 
  34. ↑ Chime, Current lead US banking app downloads in first half of 2021: reportBanking Dive
  35. ↑ "Chime Financial, Inc.: Business Profile" (in en). Better Business Bureau. https://www.bbb.org/us/ca/san-francisco/profile/financial-technology/chime-financial-inc-1116-530173. 
  36. ↑ "Chime Financial, Inc.: Overview of BBB Ratings" (in en). Better Business Bureau. https://www.bbb.org/us/ca/san-francisco/profile/financial-technology/chime-financial-inc-1116-530173/overview-of-bbb-ratings. 
  37. ↑ "Online Banking" (in en-US). https://www.chime.com/online-banking/. 
  38. ↑ Magana, Gregory. "Chime has hit 8 million accounts and is now offering a 1.6% interest rate on savings products". https://www.businessinsider.com/chime-cracks-8-million-account-milestone-2020-2. 
  39. ↑ "Home" (in en-us). https://stridebank.com/. 
  40. ↑ "What type of account is my Chime account?" (in en-US). http://chime.zendesk.com/hc/en-us/articles/224995828. 




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