Chime

Affirm

Chime

Chime makes money almost entirely from interchange fees. Every time a Chime member uses their debit card, the merchant pays a swipe fee (typically 1-2% of the transaction).

Chime keeps a portion of that interchange. The model only works at scale — Chime needs millions of members making thousands of transactions to generate meaningful revenue.

But with 22 million members, the math works. Chime also earns interest on member deposits and fees from optional instant transfer services.

Affirm

Affirm makes money from two sources. First, merchant fees — when a retailer offers Affirm at checkout, Affirm charges the merchant 5-8% of the transaction value.

Merchants pay because Affirm increases average order values by 85% and conversion rates by 20%. Second, consumer interest — on longer-term loans (6-48 months), Affirm charges interest ranging from 0% to 36% APR depending on the buyer's credit profile.

The 0% APR loans are fully subsidized by the merchant.

Chime

Chris Britt spent years working in financial services — at Visa, Green Dot, and other companies — and kept seeing the same thing: banks made a disproportionate amount of their revenue from fees charged to their least wealthy customers. Overdraft fees alone generated $35 billion annually for US banks.

The average overdraft was $36 for a $24 transaction — that's a 150% fee. Poor people were subsidizing free checking for rich people.

In 2012, Britt co-founded Chime with Ryan King (CTO) to build a bank account designed for people living paycheck to paycheck. The core promise was radical: no monthly fees, no minimum balance, no overdraft fees, ever.

You'd get your direct deposit up to two days early (because Chime could release funds as soon as they were notified of a pending deposit, while banks sat on the money for two extra days), and you could overdraft up to $200 without any penalty through a feature called SpotMe.

The product launched in 2014 and grew slowly at first. But the target market — working-class Americans frustrated with bank fees — was enormous.

Once people tried Chime and realized they'd never see another $35 overdraft fee, they told everyone they knew.

Affirm

Max Levchin was one of the original PayPal Mafia — he co-founded PayPal with Peter Thiel and Elon Musk. After PayPal sold to eBay for $1.5 billion in 2002, Levchin built several companies including Slide (sold to Google for $182 million).

But he kept coming back to the same idea: consumer credit was fundamentally broken.

Credit cards were designed in the 1950s and hadn't meaningfully changed. They used opaque pricing — minimum payments that stretched debt over decades, late fees that punished the most vulnerable, and interest rates that compounded until people owed three times what they originally spent.

Levchin thought technology could do better.

In 2012, he founded Affirm with a radical proposition: transparent lending. When you buy something with Affirm, you see the exact total cost upfront — the principal, the interest, and the exact number of payments.

The total never changes. There are no late fees.

If you miss a payment, Affirm pauses your ability to buy more but doesn't charge you extra. The idea was to make lending honest.

Chime

Chime grew through massive direct-to-consumer advertising. TV commercials, YouTube ads, podcast sponsorships, Instagram campaigns — all hammering the same message: no fees, get paid early, no overdraft penalties.

The message resonated with a demographic that traditional banks ignored or exploited: working-class Americans earning $30,000-$75,000 per year.

The "get paid early" feature was the killer hook. Chime releases direct deposits up to two days before payday.

For someone living paycheck to paycheck, getting paid on Wednesday instead of Friday is life-changing. It reduced the need for payday loans and covered emergency expenses.

The feature spread through word of mouth faster than any ad campaign.

Simplicity was a deliberate choice. Chime doesn't offer investing, crypto, or dozens of products.

They do one thing — be a great bank account for everyday Americans — and do it well. While competitors like Cash App and Revolut chased feature bloat, Chime stayed focused on the core banking experience.

Affirm

Affirm grew by landing big merchant partnerships. The breakthrough was Peloton in 2019 — when Peloton offered Affirm financing at checkout for its $2,000+ exercise bikes, both companies exploded.

A huge portion of Peloton purchases were financed through Affirm. Then came Walmart, Amazon, Shopify, and Target.

Each major retailer partnership brought millions of new consumers.

The "no hidden fees" message cut through. In a world where every financial product has fine print, Affirm's transparency was refreshing.

Levchin made honesty the brand. Every ad, every checkout screen, every email showed the exact total cost with zero surprises.

Consumers who had been burned by credit cards were drawn to a product that treated them like adults.

The Shopify integration in 2020 was a game-changer. Shop Pay Installments, powered by Affirm, made BNPL available to hundreds of thousands of Shopify merchants instantly.

Overnight, Affirm went from needing individual merchant partnerships to being embedded in an entire e-commerce ecosystem.

Chime

Chime is not actually a bank. They're a fintech company that partners with Bancorp Bank and Stride Bank to hold deposits and issue cards.

This distinction matters because Chime doesn't have the regulatory protections and permissions that come with a bank charter. In 2021, the state of California ordered Chime to stop calling itself a bank in advertising.

The regulatory status limits what products Chime can offer and adds counterparty risk.

Unit economics have been questioned. Chime spends heavily on customer acquisition — hundreds of dollars per member through advertising.

If members don't use their Chime card frequently enough, the interchange revenue doesn't cover the acquisition cost. Chime needs high engagement to make the model work, and some members treat Chime as a secondary account rather than their primary bank.

The path to IPO has been repeatedly delayed. Chime was expected to IPO in 2022 but the fintech market crash made that impossible.

The company has reportedly been preparing for a 2025 listing, but at a valuation significantly below its 2021 peak of $25 billion. The longer the company stays private, the more pressure employees with stock options face.

Affirm

Peloton dependency almost sank the company. At its peak, Peloton accounted for nearly 30% of Affirm's revenue.

When Peloton's business collapsed after COVID — demand evaporated, the stock crashed 95%, and the company laid off thousands — Affirm lost its biggest customer practically overnight. The stock fell from $170 to $9.

Affirm has since diversified, but the Peloton lesson was brutal.

Credit risk is the fundamental challenge. Affirm is lending money to consumers.

If the economy goes into recession and people stop paying, Affirm takes the losses. Delinquency rates have crept up as the post-COVID economy normalized.

Unlike banks that have decades of lending data and massive balance sheets, Affirm is still proving its underwriting models work through a full economic cycle.

The BNPL category has attracted regulatory scrutiny. The CFPB has warned that buy-now-pay-later products can lead to debt accumulation — consumers stacking multiple BNPL loans across different providers.

Affirm argues its model is fundamentally different from competitors because it underwrites every transaction and never charges late fees, but the regulatory risk applies to the entire category.

Chime

Chime Spending Account is the core — a fee-free checking account with a Visa debit card. Chime Savings Account offers automatic round-ups and a competitive APY.

SpotMe lets members overdraft up to $200 with no fees — Chime covers the difference and deducts it from the next deposit. MyPay gives members access to earned wages before payday.

The Chime Credit Builder card helps members build credit by reporting on-time payments to all three bureaus — no credit check required, no interest, secured by your own money. Instant Transfers move money between Chime members instantly.

Affirm

Affirm Pay-over-Time lets shoppers split purchases into biweekly or monthly payments at checkout. Affirm Pay-in-4 is the interest-free option — four payments over six weeks with no interest.

The Affirm Card is a physical debit card that lets you use Affirm anywhere Visa is accepted, not just at partner merchants. Affirm Savings is a high-yield savings account.

The Adaptive Checkout technology shows each customer personalized payment options based on their credit profile in real time.

Chime

DST Global, General Atlantic, Tiger Global, Sequoia Capital, SoftBank, Coatue Management, Dragoneer

Affirm

Khosla Ventures, Lightspeed Venture Partners, Founders Fund, Spark Capital, GIC, Baillie Gifford