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Chime, American technology neobank and financial services provide, has launched a new Credit Builder with similarities to debit card functionalities.
Chime, United States of America’s renowned challenger bank has announced the launching of Credit Builder, a credit card product that works like a debit card. Chime has been on the radar for offering financial services with practically no fees, particularly to American millennials. To stay relevant in today’s digital age, businesses with a digital backing must offer such value-added services as would beat the existing competition.
Entering the United States financial service ecosystem with a large number of exceptional service firms, Chime Inc has created a niche for itself and boasts of offering a faster money transaction than what is currently being offered by fiat-backed traditional financial institutions. The company’s Banking services provided by The Bancorp Bank or Stride Bank, N.A., who is a member of the United States Federal Deposit Insurance Corporation (FDIC).
Chime Debut on the Financial Scene
Chime was founded by Chris Britt (CEO) and Ryan King (CTO) in 2013 in San Francisco, California as a viable alternative to traditional banking. In contrast with traditional consumer firms, Chime has no physical branches and does not charge monthly or overdraft fees. Account-holders are issued Visa debit cards and have access to an online banking system accessible through chime.com or via the mobile app for Android or iOS.
Chime earns the majority of its revenue from the collection of interchanges. Interchange is the fee that banks charge to the merchant who processes a credit card or debit card payment in order to cover the costs associated with the authorization and processing of card transactions. An interchange based revenue model means that profitability is contingent on successfully incentivizing customers to regularly make card purchase transactions. This incentivization has spurred Chime to roll out a series of mind-blowing services to attract customers.
As a new bank with people’s interest at heart, Chime announced a pilot program in response to COVID-19 to provide users who e-filed tax returns with the IRS a $1,200 advance on the Economic Stimulus Payment via SpotMe, Chime’s fee-free overdraft product, and the company successfully processed over $375,000,000 in stimulus payments on April 10th, 1 week ahead of the scheduled government disbursement date.
Why Credit Builder from Chime Is a Position Product Inclusion
Proactive and functional banking takes into account the need of consumers before designing a product. Chime Inc in a 2015 survey discovered that about 67% of millennials preferred debit cards, which they feel are more secure and less likely to get them into debt. As a way to find the balance between consumer’s needs and the important credit score building, Chime launched the Credit Builder with Visa Card which will afford users the option to decide how much they want to spend. In achieving this, they can easily transfer money from an account where they carry out daily transactions into the Credit Builder account which they can then use for purchases up to the transferred amount wherever Visa card is accepted.
Onto Wider Adoption and Profitability
As reported by Techcrunch, Chime has been beta testing Credit Builder since June 2019 and the service has grown to reach over 200,000 enrollees. During the test period, Credit Builder has helped users increase their credit score by an average of 30 points, Chime says, citing data from Transunion. In addition, it helped 95% of members with no credit history establish a credit score for the first time.
With the launch of the card, expectations mount for great adoption of the Credit Builder Card which in ways imaginable will help boost the company’s customer base which hit 8 million in February 2020 and its valuation which currently stands at $5.8 billion as of 2019.