Debit cards, not credit cards, are the dominant mass market choice for American consumers. In fact, nearly 65% of card swipe transactions in the US are completed using debit cards. So why does it cost people money to spend with their debit cards when using credit cards earns people rewards? Sometimes a simple question can lead to powerful idea. And a powerful idea combined with a stellar team is investment gold. That’s what Homebrew encountered when we learned about Chime last year. We met an experienced team building a financial services product for the more than 2/3rds of Americans who use debit cards and get stung by monthly account fees, overdraft fees, ATM fees….you get the point. Today, Chime is announcing its Series A financing led by Crosslink Capital, a firm with deep experience in financial services. Here’s why we invested last year during their previously unannounced seed financing and again in the Series A:
WHO: Chime was co-founded by Chris Britt, CEO, and Ryan King, CTO. Chris knows the debit card business cold from his time at Visa, where he led the General Purpose Prepaid business, and Green Dot, where he held Chief Product Officer and SVP Corporate Development positions. Ryan King is an experienced technologist, having served in various engineering roles at Plaxo, including COO and VP Engineering, before leading Comcast Silicon Valley as CTO. Chris and Ryan each has lead and scaled large organizations and as a pair are uniquely suited to build Chime.
WHAT: Most of us in Silicon Valley use credit cards that earn us points, cash back, miles or any number of other rewards. Yet debit cards are still the preferred form of non-cash payment for most Americans, with over 283 million active debit cards in circulation today and each card used an average of 18 times per month. Unfortunately, debit cards actually cost the people who use them because of the various fees that banks charge. Chime has created a card with all of the advantages of debit combined with the benefits typically associated with credit cards. And it’s tied to a mobile app that puts all of the rewards and account functionality at the user’s fingertips.
HOW: By recognizing and jumping on recent regulatory changes and integrating deeply into the transaction process, Chime has created a more cost effective debit card with a rewards experience that is completely seamless. Just swipe the Chime card at a partner merchant for instant cash back and a mobile notification of savings. In addition, the Chime mobile app allows consumers to manage their accounts, track where and how their money is spent and better understand their financial situation.
WHY: One of the fundamental beliefs we have at Homebrew is that technology will increasingly save people time and money. This belief is core to our Bottom Up Economy thesis. Chris and Ryan founded Chime because they share this belief and know that current debit card products are hindering rather than helping consumers. They saw the opportunity to put a better product in the wallets and on the phones of tens of millions of consumers. People often think of “smart payments cards” as pieces of plastic packed with technological wizardry. But the smartest card is one that solves a real mass market problems - helping consumers get more with their money.
We’re thrilled to partner with Crosslink and our prior co-investors, PivotNorth and Forerunner Ventures, to support Chime as it continues to build financial products that make shopping for yourself and your family less painful. You can get your own Chime card by signing up here or by downloading the iOS or Android mobile apps.