Chime Leans on Cost Edge to Win ‘Unhappily Banked’

Chime’s first outing as a public company was a success, and CEO Chris Britt did not hedge on ambition. He waited about 30 seconds into the company’s first earnings call to tell the audience that he wants nothing less than for Chime to become “the largest provider of primary account relationships in the U.S.”

Analysts focused less on headline numbers and more on how Chime plans to expand its user base, the durability of member spending, the maturing economics of its earned-wage access feature and whether proposed bank data fees could impact its model. Management’s message: keep widening the top of the funnel, prove out unit economics on new products and lean on a cost base the company says undercuts banks.

Britt said Chime is making it easier for newcomers to try the service before committing their paychecks. The company has broadened “Day One” access by expanding funding rails and enabling features like Apple Pay and mobile check deposit immediately. It is also offering introductory access to value props that used to sit behind a direct deposit “paywall,” including the Credit Builder card and peer-to-peer payments. The aim is to lift activation and funding rates and let some prospects “date a bit before they get married” to direct deposit.

Spend per active member has been pressured by new user mix, as these lighter-weight newcomers dilute averages. Underlying trends, management said, remain steady among more tenured direct deposit users, with engagement concentrated in nondiscretionary categories such as food, gas and utilities. Moderating inflation has also taken some wind out of nominal growth rates, Britt added.

Most of the analyst questions concerned earned wage access. A year after launch, MyPay — Chime’s earned‑wage access feature — is already a roughly $300 million revenue-run-rate business, with attach rates increasing. Members can access up to $500 of earned wages; it’s free if they wait, or $2 for instant delivery. Loss rates improved faster than planned in the quarter, from just over 160 basis points of advance volume in Q1 to about 140 basis points in Q2, and the company is targeting roughly 1% at steady state. Those improvements, plus strong usage, tripled MyPay’s transaction margin quarter over quarter, executives said. The company reiterated in its release that MyPay’s momentum helped drive higher ARPAM and margin progress.

Asked about JPMorgan’s move to charge for access to customer data, Britt said consumers should be able to move their data without fees and noted Chime’s exposure is limited because it owns the primary account relationship for most members. He also pointed to recent CFPB posture suggesting such pricing is unlikely “anytime soon.” He added that even if charging became the norm, the company might be a net beneficiary given its primary account position.

The CEO opened the call by laying out Chime’s stated advantages: cost, product velocity, primary status, and brand.

Cost structure. Chime says it can serve customers at about one-third the cost of a large bank and one-fifth that of a regional bank. The company is migrating onto “Chime Core,” its proprietary ledger and processing system, to improve unit costs and speed. It also rolled out a GenAI voice bot that more than doubled satisfaction scores versus the legacy system; management says AI already automates most support interactions and has reduced cost-to-serve nearly 30% since 2022.

Product innovation. Beyond MyPay, Chime is scaling Instant Loans — small, short-duration installment loans for pre-approved members — and “Chime Plus,” a free tier that packages higher savings rates, cash-back offers and priority support.

Primary account relationship. Chime claims most active members use it as their primary account, averaging 55 transactions a month and checking the app about five times a day — behavior that underpins payments-based revenue and cross-sell. More than half of new members still come from organic and referral channels, helping keep acquisition costs in check.

Management cited unaided brand awareness of 40% — on par with the largest U.S. banks — and recent campaigns featuring high‑profile ambassadors.

By the numbers, revenue rose 37% year over year to $528 million in the quarter ended June 30. Payments revenue grew 19% to $366 million; platform-related revenue (which includes MyPay) climbed 113% to $162 million. Active members increased 23% to 8.7 million; average revenue per active member (ARPAM) rose 12% to $245; purchase volume increased 18% to $32.4 billion. Gross margin was 87% and transaction margin 69%. Guidance calls for Q3 revenue of $525 million to $535 million and full‑year revenue of $2.135 billion to $2.155 billion, with adjusted EBITDA margin of about 4% for 2025.

As Britt framed the market Chime is chasing: “It isn’t the unbanked. It’s the unhappily banked.”