Invest1 publisher2 min readPublished
Chime buys its bank partner of seven years for $590M in cash
Chime, Circle and PayTabs agreed to $1.09 billion of acquisitions in a single week, the largest of them Chime buying the bank that has partnered with it for more than seven years. Investors funded the opposite approach the same week.
The Investor · Invest desk
What happened
- Chime has a definitive agreement to acquire Stride Bank, N.A. for $590 million in cash, the biggest deal in last week's fintech funding and acquisition tally.
- PayTabs is buying Amazon Payment Services' MENA arm for $100 million, gaining payment infrastructure access in the Middle East and North Africa.
- Latitude confirmed a $35 million Series A led by Oak HC/FT, with NEA and Coinbase Ventures among the participants, taking its total funding to $43 million.
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Why it matters
- cost Chime is putting $590 million of cash into owning a counterparty it already used. That is capital not going to customer acquisition or lending.
- exposure Once Stride is a wholly owned subsidiary, the charter's obligations sit inside Chime instead of with a partner that carried them on Chime's behalf.
- contradiction Latitude drew $35 million to be the regulated layer businesses move through, with licences or approvals in 45 US markets, so selling access is still a funded business in the same week.
- precedent A $100 million exit price for a regional payments arm gives other incumbents a number to quote and local acquirers a number to test.
The seventeen companies raising equity in the same list took in $520.8 million between them, so purchases moved 2.1 times as much money as rounds did [3][4]. Chime's cash price for Stride Bank clears that entire equity column by $69.2 million on its own [5]. The largest raise on the list, Split Pay's $125 million across an A and a B led by Khosla Ventures, is about 21% of what Chime is paying [11][6].
What Chime gets is the counterparty it has been working with for more than seven years. Stride is a nationally chartered bank, and at closing it becomes Chime Bank, N.A., a wholly owned subsidiary [2][3]. The companies said the union "will create an end-to-end platform built for the AI era" [4]. The roundup does not give Stride's balance sheet or a closing date, so the deal cannot be priced per dollar of deposits from what is public [17].
The other two deals are payments purchases. Circle is paying $400 million for Tazapay, a cross-border payments company that takes it beyond its stablecoin business, with the stated aim of supporting international business payments and money movement across emerging markets [5][6]. PayTabs is paying $100 million for Amazon Payment Services' MENA arm, which gives it payment infrastructure access in the Middle East and North Africa [7][8].
The same week funded the model the buyouts are supposed to be replacing. Latitude confirmed a $35 million Series A led by Oak HC/FT, with NEA, Coinbase Ventures, Lightspeed Faction, OpenFX and Wilson Sonsini participating, taking its total funding to $43 million [9]. Latitude sells businesses a single regulated layer for moving between stablecoins and local currencies, and it is licensed or approved in 45 US markets while pursuing licenses internationally [10].
In my view Chime's purchase is the outlier of the three and Amazon's exit is the repeatable event, because a $100 million sale of a regional payments unit gives every incumbent holding a similar business a comparable [7]. A run of nine-figure charter purchases by consumer fintechs over the next few quarters would make Chime early instead of unusual. And if Latitude keeps raising while holding approvals across 45 markets, what ended in this week's list is one company's dependence on one partner bank [9][10].
What to watch
- Whether Chime discloses how it is funding the $590 million in cash, and Stride's deposit base at closing.
- Whether another consumer fintech buys its partner bank at a nine-figure price in the next two quarters.
- Whether other incumbents follow Amazon in selling regional payments units to local acquirers.