San Francisco-based consumer-friendly, zero-fee mobile banking startup Chime has raised $70 million in Series C financing, led by Menlo Ventures. The round also saw participation from the existing investors Forerunner Ventures, Aspect Ventures, Cathay Innovation, Northwestern Mutual, Crosslink Capital, and Omidyar Network.
Speaking to Menlo’s investment Shawn Carolan, who also joined as a board member said, “We love how Chime’s business growth aligns with helping more members save more money for themselves rather than being gouged by hidden bank fees. This business model shift in financial services is inevitable and Chime is leading the way.”
With the current fund raise, Chime has raised over $100 million in total funding to date and values the business at around $500 million. The company further plans to scale their business and brings to the next level. It will utilize newly raised capital in marketing and new hires as well as products and other new features.
Launched by financial and tech industry veterans Chris Britt and Ryan King in 2014, Chime is one of several challenger banks helps members avoid bank fees, save money automatically, and lead healthier financial lives. It is gaining popularity among younger, millennial audience who are sick of being penalized by hefty fees charged by the traditional banking institution.
“We think the next phase for us is going to be helping our members manage their credit and loans more effectively,” Chris Britt, Founder and CEO of Chime said to TechCrunch.
With Chime, there are no monthly fees, no minimum balance fees, no overdraft fees, no international transactions fees, and it has a network of nearly 40,000 free ATMs. However, Chime is able to generate revenue from an interchange-based business model involving its accompanying debit card, where it earns about 1.5 percent in interchange revenue from Visa.
In May 2018, Chime surpassed one million accounts and has processed over $4.5 billion in total transaction volume, solidifying Chime’s position as the clear leader in the U.S. challenger banking segment. The company further expects to reach $10 billion by year-end.