Chime hits valuation of $25 billion as payments space heats up further
Chime Financial, the fintech startup that issues cards for its users, has announced that it has raised $750 million in its latest fundraising round which now values the company at $25 billion.
The latest round of funding was led by Sequoia Capital Global Equities and this was its Series G round of funding. The other participants in this round included SoftBank’s Vision 2 Fund, General Atlantic, Tiger Global, and others. This is likely to be the final funding round before the company goes public towards the end of the year. Reports say that the company is already in discussions with investment banks about going public in the coming months.
The company offers free debit and credit cards to its customers and makes its revenue by charging payment processors like Visa whenever any of their users make use of the Chime card on the network. The company has over 20 million users and its app is reported to have excellent UI features and offers a range of financial services. Its strategy of giving our free cards and early day access to paychecks and other funds (that are direct to deposit) has helped it to quickly acquire a large userbase from the low to middle-income strata.
Doubts remain on whether this would be a sustainable revenue model in the future as it faces increasing competition from other giants like Paypal and Square but these large investments and larger valuation is likely to give it a lot of branding and clout in the industry which it can use to get better deals from its partners and also grow into other service areas.
It may also choose to charge some of the financial services that it currently offers, in the future, and the wave towards digital banking during the pandemic period has helped companies like Chime to grow rapidly and command very high valuations. Whether they would be able to sustain their growth in the coming years as users’ behavior matures and the market also reaches saturation, is what will be looked at closely. The company has said that it would be using the funds that have been raised for adding to its team, growing and expanding into other regions, and also would be looking to launch new products and services.
