Banks have long bundled payment services into the checking account to attract deposits, recovering costs through the package rather than charging individual fees.
While nonbank companies have offered credit cards to consumers for decades, only regulated banks could traditionally accept payroll deposits and issue debit cards.
Chime, a San Francisco-based technology company, saw an opportunity in consumers' frustration with traditional bank fees and their growing need to move money quickly to investment platforms like Robinhood and digital currency services like Coinbase. Their answer was to break the checking account down into its individual components.
Banking without a bank charter
Chime is a fintech company, not a bank, and operates entirely online. Without a banking license, it holds customer deposits as savings accounts at partner banks—primarily The Bancorp Bank and Stride Bank. This arrangement lets Chime avoid direct banking regulation while still offering FDIC insurance through its partners.
Chime attracts customers through mass-market advertising and differentiates itself with a self-funded 1.5% debit card cash back program—something traditional banks dropped after Congress capped interchange fees in 2010. This appeals to consumers who prefer debit over credit, or who don't qualify for attractive credit card rewards.
Chime's primary revenue source is interchange income earned on debit card purchases, though this is partially offset by costs from disputed transactions. It also charges members a fee for instant transfers to external accounts. Additional products include "SpotMe," a no-fee overdraft facility, and "MyPay," an early wage access service that lets members draw against upcoming paychecks.1
What this means for traditional banks
Despite its innovation, Chime has not turned a profit for consecutive quarters in 10 years and relies heavily on card networks and its partner banks to deliver most of its products and services.
What Chime has proven is that it's possible to unbundle the traditional checking account and attract customers without charging explicit fees—instead embedding costs in debit card network economics that are largely invisible to consumers. It has also shown how a fintech can accelerate the flow of funds away from traditional bank accounts toward investment and digital currency platforms.
For traditional banks, understanding this kind of competitive pressure is essential. Teradata’s Autonomous Knowledge Platform delivers solutions, like Customer Journey Analytics, that enable banks to detect customer intent and activate real-time decisions across the customer lifecycle. Banks must develop the analytical infrastructure to leverage signals of customer intent at the “point of decision,” which maximizes customer engagement while minimizing the opportunity for displacement by disruptive competitors like Chime.
(1) Chime Financial Inc. 10-Q, November 2025.