How does a neobank make money? Mainly from card interchange fees paid by merchants, interest earned on customer balances and loans, paid subscription plans, currency exchange and other add-on products such as investing, with the mix differing a lot from one provider to the next.
Company reports show the pattern clearly: Revolut’s 2025 revenue came from cards, interest, subscriptions, wealth and foreign exchange, while Chime says its payments revenue depends on interchange earned when members spend on its cards.
Last reviewed: October 2026.
Many neobanks advertise accounts with few or no monthly fees, so it is fair to ask: how does a neobank make money at all? This article explains each income stream in plain English, uses published company figures to show how the mix looks in practice, and notes what each stream means for you as a customer. The aim is to help you see the incentives behind the app you use.
1. Interchange: the fee merchants pay on card spending
So how does a neobank make money from everyday spending? When you pay by card, the merchant’s bank pays a fee to the bank that issued your card. This is interchange, and the issuer, which may share it with the neobank, keeps a small slice of each purchase. Above all, it is the signature revenue stream of spending-led neobanks.
Chime is a good example. Banking Dive reported in May 2025 that much of its revenue came from interchange on its debit and credit cards, not from fees charged to members. In its Q2 2026 results Chime reported payments revenue of about 430 million dollars, which it ties to card purchase volume and the interchange fees that apply to it. Similarly, Revolut’s 2025 annual results show that card payments generated 1.3 billion dollars of revenue.
In the US, regulation matters: the Federal Reserve’s debit interchange standards do not apply to issuers that, with affiliates, hold less than 10 billion dollars in assets. Which bank issues a neobank’s cards can therefore influence how much interchange is earned. The practical lesson is that spending-led models are rewarded when customers use the card as their primary payment method.
2. Interest: how a neobank makes money on balances and loans
How does a neobank make money from balances? Like any bank, it earns by lending out or investing deposits at a higher rate than they pay savers. Neobanks with banking licences do this directly. Revolut reported interest income of 1.3 billion dollars in 2025, and its customer balances stood at 67.5 billion dollars. Starling and Monzo, which are UK-licensed banks, also earn from lending and from placing deposits with central banks and other institutions. Naturally, interest income depends heavily on interest rate levels, so it can rise and fall with central bank decisions.
Partner-bank models can also earn from deposits, though the accounting differs because the partner bank holds the money.
3. Subscriptions and paid plans
How does a neobank make money beyond cards and interest? Many sell tiered plans with extras such as travel insurance, higher limits or cashback. Revolut reported subscription revenue of 936 million dollars in 2025, up 67 percent. Monzo reported more than 1.6 million customers on paid plans in its FY2026 results, up 49 percent. For customers, this means the free tier is often designed to lead to a paid upgrade, so compare what each paid tier adds against what you will actually use.
4. Foreign exchange and international payments
How does a neobank make money from travel? Currency conversion and cross-border transfers can be profitable, especially for multi-currency apps. Revolut reported 800 million dollars of FX revenue in 2025, up 43 percent. Therefore, check the exchange rate and any markup on weekends or above allowance limits, since the headline “no fee” may be offset by the rate.
5. Credit: how a neobank makes money from cards, overdrafts and advances
How does a neobank make money from credit? Lending products produce interest and fees but also credit losses. Chime says its platform-related revenue, reported at about 240 million dollars in Q2 2026 and up 48 percent, is linked to products such as MyPay and instant loans, although its release does not formally define the line. Nubank in Brazil, which reported 139 million customers and net income of about 1.1 billion dollars in Q2 2026, shows how large lending-led digital banks can become. On the other hand, credit is where losses can build if customers cannot repay.
6. Wealth, trading and other add-ons
How does a neobank make money once it adds investing? Revolut reported 876 million dollars of wealth revenue in 2025, up 31 percent, from investing and related services. In addition, others earn from referral commissions, business accounts and software or banking-as-a-service sold to other firms. Revolut Business alone accounted for 16 percent of Revolut’s total income in 2025.
How does a neobank make money in practice: a quick comparison
| Provider | Figures reported | Where revenue shows up |
|---|---|---|
| Revolut (2025) | Revenue 6.0 billion dollars; card payments 1.3bn, interest 1.3bn, subscriptions 936m, wealth 876m, FX 800m | Diversified across five lines |
| Monzo (FY to March 2026) | Revenue about 1.7 billion pounds; more than 1.6 million paid-plan customers | Interest, interchange, paid plans and business |
| Chime (Q2 2026) | Revenue about 669.8 million dollars; payments about 430m; platform-related about 240m | Interchange-led, with growing platform products |
Revolut’s source notes that the individual lines do not sum to total revenue, so the figures should be read as illustrations of scale, not a full breakdown.
What this means for you
- If a service is free, find the revenue stream. For card-led apps it is probably your spending; for a lender it is interest.
- Watch for nudges to upgrade plans, borrow or trade, since those are growth levers for the company.
- Read the rate and fee pages for foreign exchange and out-of-allowance use.
- For profits and sustainability, see are neobanks profitable. For what a neobank offers in the first place, see what a neobank does.
How does a neobank make money from a free account?
In short, a free account is usually the entry point, not the product. Once someone receives their pay into an app and uses the card daily, the provider can earn interchange on each purchase, hold balances that earn interest and offer upgrades, loans, currency exchange or investing over time. Chime says nearly two thirds of its members regard it as their primary financial relationship, according to its IPO filing as reported by Banking Dive, which is the situation where card spending is highest. This is why neobanks put so much effort into getting customers to switch their salary, not just open an account.
Revenue is not profit: a neobank can make money and still lose
Knowing how does a neobank make money is only half the picture. Each stream also carries costs: card programme fees, fraud losses, credit losses, regulation and customer support. Chime reported a net loss of 25 million dollars on revenue of 1.67 billion dollars for 2024, while Monzo reported profit before tax of 172.6 million pounds on revenue of about 1.7 billion pounds for the year to March 2026. Clearly, the same revenue lines can produce very different outcomes depending on cost control. Our profitability guide compares the results in more detail.
How does a neobank make money from you? Spot the model in your own app
- Open the fee schedule and look at the foreign exchange, ATM and overdraft lines; this is where a neobank makes money from exceptions.
- Check whether your card earns cashback. That usually means the provider shares part of the interchange with you.
- See what upgrade screens promote, since they reveal the products the company most wants to sell.
- Read the savings terms to see whether interest is paid by a partner bank and under what conditions.
Worked example: what one customer is worth in a year
Company totals are hard to relate to. A simpler way to see how does a neobank make money is to follow one illustrative customer for a year. All figures below are made-up examples, not published rates.
| Stream | Assumption (example) | Annual revenue (example) |
|---|---|---|
| Interchange | Card spending of 1,500 a month; the neobank keeps 1 percent | 180 |
| Interest on balances | Average balance of 2,000 earning 4 percent, with 1 percent paid to the customer | 60 |
| Paid plan | Customer upgrades to a mid tier half way through the year | Varies by provider |
| Foreign exchange | Two trips abroad with 1,000 of spending each at a 1 percent weekend markup | 20 |
| Lending | No credit product used | 0 |
In this example, card spending matters most, which is exactly why providers push you to make their card your main one. Moreover, the customer who keeps a zero balance and uses another bank’s card is worth almost nothing. That explains the constant nudges to switch your salary.
Which streams depend on you, and which depend on markets
Not every answer to how does a neobank make money responds to the same forces. Understanding this helps you read a neobank’s results and, more importantly, predict how its behaviour toward you may change.
- Customer-driven: interchange, subscriptions, foreign exchange and trading commissions all rise when you spend, upgrade, travel or trade. The provider can influence these through app design and promotions.
- Market-driven: interest income tracks central bank rates. When rates fall, a bank-licensed neobank can see this line shrink quickly, which often leads to new fees or stronger upselling elsewhere.
- Risk-driven: lending revenue depends on credit losses. In a downturn, a lending-led neobank can see revenue hold up while profit collapses.
Consequently, a neobank with several streams is more resilient than one that depends on a single line, which is one reason analysts watch the mix as closely as the total. Our guide on how to value a neobank explains how this feeds into valuation.
Common misconceptions about how neobanks earn
Ask ten people how does a neobank make money and you will hear most of the myths below.
- They sell your data. Large licensed providers generally state that they do not sell personal data, and privacy law limits it in the UK and EU. Revenue comes from the streams above, not from data brokers.
- Free means they lose money on you. A free account can be profitable if you spend on the card and hold a balance, as the worked example shows.
- Interchange is tiny, so it cannot matter. It is small per transaction, but across millions of customers and billions in spending it becomes the largest line for card-led providers such as Chime.
- Only licensed banks earn interest. Partner-bank models often share in the interest earned on balances held at the partner, under commercial agreements.
- Revenue growth means the company is healthy. As the profit section shows, costs and credit losses decide whether revenue becomes profit.
Sources and further reading
- Revolut: 2025 results and revenue lines
- Chime: Q2 2026 results release (SEC)
- Banking Dive: Chime files for IPO (May 2025)
- UKTN: Monzo FY2026 results
- Nu Holdings: Q2 2026 results
- Federal Reserve: debit interchange standards (2011 release)
- Wikipedia: Neobank (revenue sources overview)
Frequently asked questions
How do neobanks make money if accounts are free?
Mainly from interchange fees on card spending, interest on balances and loans, paid subscriptions, currency exchange and add-on products.
What is interchange?
A fee paid by a merchant’s bank to the card issuer on each card purchase. The issuer may share part of it with a neobank partner.
Do neobanks earn interest on my deposits?
Licensed banks earn interest by lending or placing deposits. Whether and how much they pass on to you as interest depends on the product.
Are paid plans worth it?
Only if you use the extras. Compare the cost to the value of the benefits you would actually use.
Do neobanks sell my data?
Check each provider’s privacy policy. This article only covers publicly reported revenue lines.
Which revenue stream is the biggest?
How does a neobank make money most of all? It varies. Chime is interchange-led, while Revolut reports comparable amounts from cards and interest and large subscription, wealth and FX lines.
More questions about how a neobank makes money
Why do some neobanks lose money?
Customer acquisition, technology, compliance and credit losses can exceed revenue, especially at early stages.
Does interchange regulation affect neobanks?
In the US, issuers with under 10 billion dollars in assets are exempt from the Federal Reserve’s debit interchange standards, which can influence revenue for partner-bank models.
Do neobanks make money from ATM fees?
Some do, through out-of-network ATM fees or by keeping a share of operator fees, but it is usually a minor line. Many advertise fee-free ATM access as a feature rather than treating it as revenue.
How does a neobank make money without a banking licence?
It earns a share of interchange and interest through its agreement with the partner bank that holds the deposits and issues the cards, and it keeps subscription, foreign exchange and referral revenue for itself.
Does a neobank make money if I keep a zero balance?
Very little, unless you spend on its card or pay for a plan. A customer who only opens an account and uses another bank for daily spending is close to a cost rather than a source of revenue.
General information only, not financial advice. Figures are from company releases and reports as cited and may be rounded.