Digital bank Current says it immediately credited member accounts, with the funds beginning to flow at 11 am ET on Friday.
The difference in timing can be significant to many customers, especially those whose careers have been sidelined by the pandemic. And it’s a way for fintechs to stand out from their better-known and much larger rivals.
“Affluent people may ask: What’s the big deal? Well, it means a lot if you’re living paycheck to paycheck, trying to make ends meet,” Chime co-founder and CEO Chris Britt told CNN Business on Monday. “Who doesn’t want to get paid sooner? It gives you flexibility to take care of your financial needs and live life, especially when people are struggling.”
How Chime pays early
All of this raises the question: Why are Chime customers getting their checks from Washington before Chase customers?
Unlike traditional banks, Chime doesn’t wait for the money to actually arrive. It pays it out early, not just for stimulus checks but paychecks and tax refunds as well.
“I guess you could argue we’re taking a risk,” Britt said. “But we’ve been told by the Federal Reserve that the money is coming so we don’t think it’s that much of a risk. It’s a choice the big banks could make. They certainly have the balance sheets to do it.”
Chime pays out early even when it’s not Uncle Sam cutting the checks. The startup estimates it gives customers early access (typically two days early) to more than $3 billion of payroll direct deposits each month.
Chime is valued at $14.5 billion, making it the most valuable consumer fintech in the United States, according to PitchBook. But Chime isn’t actually a bank. It’s a fintech platform that partners with FDIC-insured lenders Stride Bank and The Bancorp Bank to offer checking and savings accounts.
As a private company, Chime doesn’t release its number of customers. But the startup says it’s opening hundreds of thousands of bank accounts each month. And at least some of those customers are coming from big banks.
‘Off the charts’ buzz from customers
The payments are expected to reach about 90% of US families, according to the Penn Wharton Budget…
Read More: Chime is giving customers early access to billions in stimulus checks