Digital bank Chime can instantly pay the stimulus cheques to all its customers but awaits Government assurance.

The digital challenger bank, the largest of its kind in the U.S., stands ready to pay out the stimulus cheques of $1,200 each.  In a test run, it randomly chose 1,000 of its clients who met certain criteria with immediate access to $1,200 of spending power through SpotMe while they waited for their government stimulus payment. SpotMe is the firm’s free alternative to bank overdrafts. (CROWDFUND INSIDER).

Government assurance awaited

In a phone interview with CNBC, Chime CEO Chris Britt said: “We’re putting real dollars on the line, without interest rates or guarantees. We’d love to give it to more people. If we had greater certainty that the payments will hit our accounts, we’d do it.”

Basically, it means that Chime will fund customers’ accounts with $1,200 in the form of an overdraft facility in advance of the government’s payout. Customers may use the facility for urgent purchases pending the receipt of cheques from the government – this could take as much as two to three weeks to arrive.

Britt stressed that consumers needed immediate access to the money to pay their bills.

In a reflection of the dire impact of the coronavirus, weekly jobless claims surged to a staggering 6.6 million last week, more than double the 3.1 million expected. By one estimate, over 10 million Americans have lost their jobs due to the coronavirus.

For Chime, the qualifying customers for the stimulus linked overdraft facility would be those that deposited both their paychecks and tax refunds into a Chime account.

However, to be able to roll out the facility to more customers, Chime must be certain that the Government will pay the stimulus money to their Chime account. Chime, therefore, needs assurance from the American government that customers would not be able to transfer stimulus payments to other bank accounts.

Mark Cuban the source of inspiration

According to CNBC, Britt said he got the brainwave for the service from serial entrepreneur Mark Cuban. Cuban owns the Dallas Mavericks.

Cuban also had a role to play in similar assistance offered by community bank Citizens Bank of Edmond. In this case, the bank’s CEO Jill Castilla, just like Chime’s Britt, credited Cuban with the idea for advance payment of stimulus assistance to customers.

Citizens Bank of Edmond is advancing an interest-free overdraft line that customers can repay upon receiving the stimulus cheque.

Related Story:  FinTech: Challenger Bank Chime’s Latest Raising Stands at $700 Million