Chime collected $1.67 billion in revenue during 2024 while charging no monthly maintenance or overdraft fees, and substantially all of that revenue came from debit interchange, according to its May 2025 S-1 filing. The same filing reported 8.6 million funded accounts as of March 2025 and $25 million in net income.
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Where Does the Money for Free Checking Actually Come From?
Mostly from merchants. Every time a customer pays with a neobank's debit card, the merchant's bank pays an interchange fee to the card-issuing bank, and the neobank takes a contracted share. Chime's S-1 states that substantially all revenue is interchange, which is why free checking survives without monthly fees.
Interchange, defined once, is the wholesale fee that a merchant acquirer pays to a card issuer on each transaction, set by the card networks within regulatory limits. Because the fee scales with purchase volume, a neobank's income depends on how often funded accounts swipe, tap and pay bills, not on what customers are charged directly.
The pricing contrast is measurable. Bankrate's 2024 checking survey found an average monthly fee of $15.65 on interest checking and $5.47 among noninterest accounts that charge one, with an average minimum balance of $10,705 required to waive the interest-account fee. Neobanks drop the fee to win the primary banking relationship, then earn on activity inside it.
Why Do Durbin Caps and Partner-Bank Size Matter So Much?
Because Regulation II caps interchange only for banks with assets of $10 billion or more. Covered issuers are capped at 21 cents plus 0.05 percent of the transaction plus a 1-cent fraud adjustment, per the Federal Reserve's 2011 rule, while banks under $10 billion stay exempt and earn more.
The exemption is the quiet foundation of US neobank economics. Chime's debit cards are issued by The Bancorp Bank and Stride Bank, per the company's disclosures, both below the threshold that would trigger the cap. A November 2023 Federal Register notice summarizing the Federal Reserve's Regulation II data collections reported that average per-transaction interchange for exempt issuers has remained substantially higher than for covered issuers.
The math is visible on a single $50 purchase. A covered mega-bank earns at most about 24.5 cents: the 21-cent base, 0.05 percent of the transaction, which is 2.5 cents, and the 1-cent fraud adjustment. An exempt issuer on the same purchase typically earns more under network rates. Proposals in Congress to extend caps to exempt issuers have not been enacted as of January 2026, per legislative records.
What Do Premium Subscription Tiers Add?
Recurring, high-margin fee income that does not depend on card spend. Revolut's US plans show the pattern: a free Standard tier, Premium at $9.99 per month and Metal at $16.99 per month, per the company's US pricing page in 2025, bundling foreign-exchange allowances, travel perks and higher savings yields.
Subscriptions change the revenue mix. Interchange fluctuates with spending each month, while a paid plan bills on a schedule and carries near-zero marginal cost once the member is onboarded. Dave, a public neobank, charges a $1 monthly membership for its core service, per the company's pricing. The trade-off is churn: members cancel paid tiers faster than they abandon free accounts.
For most US neobanks, subscriptions remain the smaller engine. Revolut, which reported more than 50 million global customers in 2024, uses tiers at scale, but interchange still dominates the American market because debit routing rules, not software features, set the payoff.
How Does Deposit Float Become Revenue?
Deposits sit at the partner bank and are invested in loans and securities. With the federal funds target range at 4.25 to 4.50 percent after the Federal Reserve's December 2024 meeting, idle balances generate meaningful interest, and contracts determine how much flows to the platform versus depositors.
Float rewards scale. A checking program with billions in average balances produces interest income even when every account is free of fees. The cost side is the APY advertised to savers: Revolut reserves its highest advertised yields for paid tiers, per its US pricing page, and any yield a neobank pays out directly reduces the spread it keeps.
The sensitivity runs both directions. When policy rates rise, float income grows with no product change; when they fall, the same balances earn less. As of January 2026 the model still assumed a rate environment well above the near-zero years before 2022, per Federal Reserve rate decisions.
Where Does Lending Fit Into the Model?
As a second engine, usually after interchange. Chime's Credit Builder secured card carries no annual fee, per the company, and its MyPay earned-wage advances, launched in 2024 per Chime's announcement, can carry fees for instant access. Lending adds yield but adds credit risk that pure interchange never carries.
Lending also feeds the core engine. A secured card generates interchange on every purchase while producing repayment data the neobank can use for larger credit lines later. SoFi, which became a national bank by acquiring Golden Pacific Bancorp in 2022, runs the fuller version of the model: deposits fund personal loans and refinancing products alongside payments.
For a pre-lending neobank, credit products are optional. Chime reached its first profitable year in 2024, with $25 million of net income on $1.67 billion of revenue, almost entirely without extending conventional credit, per its S-1.
What Do the Unit Economics Look Like Per Account?
Roughly $194 a year, or about $16 a month, for Chime. Dividing the $1.67 billion of 2024 revenue by 8.6 million funded accounts reported in the S-1 gives that run rate, and it approximates the monthly-fee income a mid-priced traditional account generates, except merchants pay it instead of customers.
The figure is a blended average, and the distribution matters more than the mean. Heavy card users can produce several times that revenue; dormant funded accounts produce almost nothing while still costing servicing and compliance overhead. That spread explains why neobanks invest in defaulting the debit card, instant alerts and round-up features that raise transaction counts.
Cross-checking against fee income shows why banks defend the status quo. A traditional interest-checking customer avoiding a $15.65 monthly fee needs $10,705 parked at the bank, per Bankrate's 2024 survey, while a neobank earns a comparable amount from an active debit relationship funded by interchange economics.
Which Structural Pressures Sit on This Model?
Three structural ones: regulation, rates and competition. Extending Durbin-style caps below $10 billion has been proposed in Congress but not enacted as of January 2026. Falling policy rates reduce float income. And APY competition forces neobanks to hand more interest to depositors, compressing the spread they keep.
None of these has yet displaced interchange from the top of the income statement for the largest US neobank: Chime's 2024 results, per the S-1, show a company whose profit emerged only after scale, and whose revenue still moves primarily with debit volume.
For more context, read Revolut's OCC Charter Application Reaches Month Three in US Push.
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For more context, read bnpl underwriting.
