Chime

Klarna

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.

Klarna

Klarna makes money from merchant fees and consumer interest. Merchants pay Klarna 3-6% of each transaction — they're willing to pay because Klarna increases conversion rates by 30%+ and average order values by 45%.

On "Pay in 4" (interest-free installments), Klarna makes money purely from merchant fees. On longer financing (6-36 months), Klarna charges consumers interest up to 25% APR.

Klarna also earns revenue from its shopping app (affiliate commissions when users discover and buy from merchants), and from its Klarna Card.

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.

Klarna

Sebastian Siemiatkowski, Niklas Adalberth, and Victor Jacobsson were students at the Stockholm School of Economics. In 2005, they entered a startup competition with an idea: let people buy things online and pay later.

At the time, online shopping was still new and most people were terrified of entering their credit card details on the internet. The idea was simple — Klarna would pay the merchant immediately, and the customer would get an invoice with 14-30 days to pay.

The competition judges hated it. The idea was dismissed as financially irresponsible and the team didn't win.

But Siemiatkowski pressed on. Swedish e-commerce was growing fast and merchants were desperate for any way to reduce cart abandonment.

Klarna's "pay after delivery" model was a hit because it shifted the risk — customers could receive the product, try it on, and only pay for what they kept.

The first customers were Swedish e-commerce merchants selling fashion and home goods. Klarna handled the invoicing, fraud detection, and collections.

Merchants saw conversion rates jump because customers were more willing to buy when they didn't have to pay immediately.

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.

Klarna

Klarna grew by being embedded at checkout. The strategy was to sign up the biggest online retailers and become a payment option alongside Visa and PayPal.

Once Klarna was at checkout, consumers discovered it organically. The "Pay in 4" button became ubiquitous across fashion, electronics, and home goods retailers.

The Klarna app became a growth engine beyond checkout. By building a shopping app where users could browse products, discover deals, and track deliveries, Klarna turned from a payment method into a shopping destination.

The app has 35+ million monthly active users who start their shopping journey inside Klarna before even visiting a retailer.

International expansion was aggressive. Starting in Sweden, Klarna rolled out across Europe, then into the US, UK, and Australia.

The US became the biggest growth market — American consumers were especially receptive to Pay in 4 as an alternative to credit cards. By 2023, Klarna had 34 million US users.

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.

Klarna

The valuation collapse was humiliating. Klarna raised at a $46 billion valuation from SoftBank in 2021.

One year later, they raised a down round at $6.7 billion — an 85% haircut. It was the most dramatic valuation drop in fintech history.

Employee stock options were underwater. Siemiatkowski had to lay off 10% of the workforce.

The entire BNPL category went from hot to radioactive in months.

Credit losses are the existential risk. Klarna is lending money to consumers who want to buy things they can't afford to pay for right now.

When the economy slows, defaults rise. Klarna's credit losses hit $1 billion in 2022.

The company had to tighten underwriting significantly and pull back from riskier markets. The tension between growth (approve more loans) and profitability (reject risky borrowers) defines every quarter.

The IPO in 2025 was a comeback story but with caveats. Klarna went public at $15 billion — a major recovery from the $6.7 billion trough but still less than a third of its 2021 peak.

The company finally turned profitable by slashing costs with AI (replacing hundreds of customer service agents with AI chatbots) and tightening credit standards. But investors remain cautious about the BNPL model's long-term sustainability.

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.

Klarna

Pay in 4 is the signature product — split any purchase into four interest-free payments over six weeks. Pay in 30 lets customers receive the product first and pay within 30 days.

Financing offers longer-term payment plans with interest for larger purchases. The Klarna App is a shopping destination — browse deals, track orders, manage payments, and earn cashback.

The Klarna Card is a physical Visa card that lets users Pay in 4 anywhere. Klarna Creator is a platform for influencers to earn commissions sharing products.

Klarna AI is their customer service chatbot that handles two-thirds of support queries.

Chime

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

Klarna

Sequoia Capital, SoftBank, Silver Lake, GIC, Atomico, Commonwealth Bank of Australia, Heartland