Chime Converts More Paychecks Into More Products

For Chime Financial, direct deposit is proving to be the underwriting and repayment infrastructure for a growing lending business.

That connection was clear in second-quarter results released after the markets closed Wednesday (Aug. 5).

Instant Loan originations rose nearly 70% from the prior quarter to $300 million, aided by automatic prequalification for qualifying Chime Prime members. The company’s recurring visibility into members’ paychecks gives it first-party income data and a favorable position for collecting repayments, potentially allowing it to expand credit without relying as heavily on traditional underwriting inputs.

Chime Co-Founder and CEO Chris Britt said on the conference call with analysts that the company was demonstrating “success in developing primary account relationships” adding that “these recurring direct deposits drive more precise underwriting and an advantaged loan repayment position.”

The primary financial relationships, of course, open the door to attaching additional products.

Chime Prime is central to that effort. Members qualify by making at least $3,000 in monthly direct deposits and receive benefits that include cash-back rewards, higher MyPay limits and automatic Instant Loan qualification. The incentives are designed to encourage members to move more of their paycheck and spending activity into Chime rather than use the account as a secondary destination.

During the analyst question-and-answer session, Britt said Prime is working both as an upgrade path for existing members and as an acquisition tool.

“We are definitely seeing a strong uptick in existing members who elect to give us even more of their direct deposits,” he said.

That strategy helped revenue rise 27% year over year to $670 million. The growth came from a combination of more active members, greater payments activity and higher platform revenue tied to products such as MyPay and Instant Loans. Chime ended the quarter with 10.4 million active members, up 20%, while adding 1.7 million during the past 12 months.

Chief Financial Officer Matt Newcomb emphasized during the call that Chime added more members making at least $3,000 in monthly deposits than in any previous quarter and saw retention improve among existing direct depositors.

Chime now expects to add 1.8 million active members this year, up from its original target of 1.4 million. Late-stage direct deposit conversions, involving members who move their paycheck after initially using other features, reached a record.

The lending strategy extends beyond Instant Loans. MyPay, Chime’s earned wage access product, recorded $4.5 billion in originations, with transaction profit more than tripling from a year earlier. The company is testing limits of up to $1,000 for members its models identify as able to manage larger advances. Repeat Instant Loan borrowers have produced loss rates as much as 50% below those of first-time borrowers, providing Chime with additional data for refining eligibility.

Management said it has not seen consumer deterioration underneath that growth. Britt told analysts that overall and discretionary spending were rising, including entertainment, food delivery and online shopping, while savings balances were also increasing. Growth has been faster among higher-income members, but he characterized the spending gains as broad-based and said Chime had not detected stress in its credit products.

AI is being used on both sides of the operation. Jade, Chime’s AI financial assistant, can identify changes in a member’s spending and suggest actions such as setting limits. Britt said individual choices may be small, but told analysts that “smart money moves compound over time and collectively lead to financial progress.”

Internally, AI is also part of management’s explanation for reducing Chime’s workforce by approximately 10%. Britt said smaller teams with fewer management layers were shipping products faster with AI tools. Some payroll savings will be reinvested, while Chime expects payroll costs to remain roughly flat in 2027.

Chime plans to test a revolving unsecured line of credit for Prime members, aimed at consumers who need more flexible access than an installment loan provides. It is also increasing MyPay limits and exploring broader Instant Loan eligibility and duration.

Newcomb said the raised outlook rests primarily on stronger transaction-volume growth and continued demand for liquidity products.

Shares were up 7% in after hours-trading on Wednesday.