The growing number of P-to-P payment options, including Zelle and Venmo, typically rely on a link to a full-featured bank account to fund transfers. ChimpChange is looking at a different audience.
Its model relies on the hangover of the 2008 financial crisis creating a permanent market of millennials and others who refuse to rely on traditional bank relationships. Though ChimpChange can be funded from a bank account, it also supports PayPal and provides a prepaid Mastercard for bill payments, in-store or e-commerce purchases and ATM access.
"We cater to the tens of millions of American that don't want overdraft fees and account fees," said Ash Shilkin, who's also the CEO of the Los Angeles-based ChimpChange. When he was 14, Shilkin said he had a vision of people using their watches to "zap" payments to each other. ChimpChange doesn't work like that, at least not yet, but it works in a manner that's similar to Venmo or Moven, two companies that approach consumers seeking a more social and smartphone-centered relationship with financial services than that provided by most banks.
ChimpChange uses a single app to perform P-to-P transfers using a personal photo and a caption. Users provide the recipient's mobile number or contact, the transfer amount and other info to initiate a payment. If the recipient is a ChimpChange user, he or she will receive an alert that cash is available. If the recipient is not a user, the email will include a link with instructions on how to retrieve their money.
The social aspect of the P-to-P transfers is also an alternative to Zelle, which does not plan to allow such content in its messaging at this time.
ChimpChange has been active for just under a year, and has signed up 100,000 people in that time—about two thirds millennials, with the rest coming from a broad demographic range. "It's a crossover between underbanked an millennials," Shilkin said.
The direct tie to a prepaid account is important, according to Andy Schmidt, an executive advisor at CEB. "There needs to be some sort of differentiation from being a 'me too' solution. It's a crowded space where it's hard to attract attention."
ChimpChange also has features many banks use to create stickier relationships. The added financial services and prepaid card make ChimpChange a competitor to Green Dot's Go Bank, BBVA's Simple and Moven, according to Michael Moeser, director of payments at Javelin.
"Using photos and emojis, along with leveraging the mobile phone are clearly tactics that cater to millennials," Moeser said. "However, the free nature of the banking services has a broader appeal, evidenced by 33% of ChimpChange's customers not being millennials."
ChimpChange aims to compete in both the prepaid and P-to-P markets by frequently updating its app, Shilkin said, calling the strategy "feature rich." ChimpChange recently updated its app to include a spending wheel that auto characterizes transactions each month; and the ability to re-categorize transactions in an effort to control spending.
ChimpChange, which is publically traded on the Australian Stock Exchange, does not charge fees for monthly subscriptions, ATM withdrawals in a network of about 24,000 affiliated machines, direct deposit loads, transfers and domestic point of sale PIN or signature transactions. It charges $1.50 for bank withdrawals, 3% fees for non-U.S. dollar payments, $1.95 for out of network ATM transactions, $3.50 for non-U.S. ATM transactions, and fees for various services. The prepaid Mastercard is also not available in Vermont, New Hampshire, Connecticut and Rhode Island
And like a lot of the post-2008 "non bank" startups that either partnered with a bank or eventually became part of a bank, ChimpChange has a relationship with Central Bank of Kansas City, which issues the prepaid Mastercards. "The bank partnership provides FDIC insurance to give our consumers peace of mind," Shilkin said. "Our technology gives users a seamless experience with P-to-P transfers and other money management tools."