Chime is piloting instant stimulus check disbursals
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US neobank Chime is running a pilot in which it gives customers their $1,200 federal stimulus checks before the government begins disbursing the payments, CNBC reports.
Putting its own money on the line without requiring any concrete guarantees from customers is a significantly risky move for Chime. Britt said that Chime is getting customers their payments "without interest rates or guarantees," per CNBC. This shouldn't be a problem in cases where customers eventually have their actual checks deposited directly into their Chime accounts, as that will immediately cover Chime's cost.However, if some customers redirect their checks away from their Chime account, the neobank could end up having to choose between swallowing the $1,200 loss until a customer pays it back or imposing clear repayment terms or interest rates. The latter decision would run an additional risk of making Chime look callous, given the already difficult economic conditions that the coronavirus pandemic is inflicting on consumers.
Despite the risks, Chime's move is one of the most aggressive plays we have seen from a neobank to help customers during the pandemic. If Chime does roll out early stimulus check access to more of its customers, it could significantly boost customer loyalty, as it's a clear and direct effort to bring much-needed financial relief. Furthermore, the initiative could be a potent customer acquisition tool if Chime markets it, as the draw of an early stimulus check could get prospective customers to both sign up for Chime and set up direct deposits with the neobank.Customer loyalty and acquisition will both be critical goals for neobanks during the pandemic as US incumbent banks are taking a slew of actions to aid customers, and consumers more widely may seek the safety of more established institutions. And as an added benefit, Chime's aggressive play could also bolster its relationship with the federal government, which has been asking all banks to step up and ease the economic burden and may be impressed to see a neobank getting enthusiastically onboard.Want to read more stories like this one? Here's how to get access:
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