Digital Banks Surge in Q2 as BNPL Hits a Credit Reporting "Snag"
Plus: Chime, Dave, and Green Dot raise 2025 guidance; The fight over "Pay-in-4" data heats up; Consumer credit stabilizes despite 22% APRs.
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The second quarter of 2025 highlighted robust growth for many companies on our watch list, with digital banking platforms reporting significant revenue acceleration and user growth. Concurrently, the Buy Now, Pay Later (BNPL) market continued its expansion into physical retail while grappling with challenges related to credit reporting. Broader consumer credit trends indicate stabilization, although high interest rates continue to be a concern.
Digital Finance Platforms Show Strength in Q2
Several fintech companies reported strong Q2 2025 results, with many raising their full-year outlooks.
Chime (CHYM), in its first quarter as a public company, reported a 37% year-over-year revenue increase to $528 million, driven by a 23% growth in active members, reaching 8.7 million. While Chime posted a substantial net loss of $923 million due to IPO-related expenses, Adjusted EBITDA was $16 million. Chime Investor Relations
Dave (DAVE) demonstrated accelerated momentum, with revenue surging 64% YoY to $131.7 million—its fastest growth rate in over five years. The company attributed this to ARPU expansion and growth in Monthly Transacting Members. Adjusted EBITDA increased 236% to $50.9 million, leading Dave to raise its 2025 guidance. Dave Investor Relations
Green Dot (GDOT) also raised its 2025 guidance, reporting a 24% increase in non-GAAP revenue to $501.2 million. The company cited strong momentum in its Banking-as-a-Service (BaaS) division, highlighting new partnerships with Samsung and Credit Sesame. Green Dot Investor Relations
NerdWallet (NRDS) reported a 24% year-over-year revenue increase to $186.9 million for the quarter. This growth was primarily driven by strong performance in its insurance, banking, and loans verticals. However, the company faced challenges in its credit card and small and mid-sized business (SMB) segments, which saw declines due to lower organic search traffic.
To address these issues and drive future growth, NerdWallet highlighted progress across its key strategic pillars. The company is working to diversify its audience by launching new newsletters for travel and SMB owners, with its travel newsletter attracting a readership that is 75% new to the platform. Additionally, NerdWallet is enhancing its SMB services with a human-assisted sales concierge and expanding its lending operations. The company also grew its registered user base by 26% year-over-year to 28 million members, focusing on increasing user engagement through its redesigned app. Business Wire
Block (SQ) reported a slight 1.7% YoY decline in revenue to $6.05 billion, but gross profit rose 14% to $2.54 billion. The company raised its full-year profit forecast. Block Investor Relations
BNPL Expands Offline Amid Credit Reporting Friction
The BNPL sector continues to evolve, marked by strategic expansion and ongoing debates over credit integration.
Affirm (AFRM) announced a significant move into brick-and-mortar retail by integrating its pay-over-time options onto Stripe Terminal devices. This allows in-store shoppers in the U.S. and Canada to use Affirm at the point of sale. Affirm Investor Relations
However, the industry push to include BNPL loans in traditional credit scores has "hit a snag," according to the Wall Street Journal. Major providers, including Klarna and Afterpay, are reportedly withholding data on their popular "Pay-in-4" loans. They are concerned that current credit scoring models may unfairly penalize consumers for utilizing multiple short-term loans. Affirm, conversely, has begun sharing its data with credit bureaus. Wall Street Journal
Consumer usage patterns are also under scrutiny, with reports highlighting a trend of younger generations using BNPL for discretionary purchases like Botox and concert tickets. Wall Street Journal
In corporate developments, Klarna is reportedly considering rescheduling its IPO for September 2025. TechCrunch Meanwhile, Sezzle (SEZL) CEO Charlie Youakim discussed strategies focused on direct-to-consumer subscription models and positioning BNPL as a "budgeting tool." OptoForesight
Consumer Credit Stabilizes, But Interest Rate Awareness Lags
The U.S. consumer credit market is showing "signs of stability and measured growth" at the midpoint of 2025, according to TransUnion. Their Q2 2025 report noted that credit card balance growth has normalized to 4.5% YoY, a significant slowdown from recent double-digit growth, and delinquencies have slightly improved. TransUnion Newsroom
Despite this stabilization, concerns remain regarding the impact of high interest rates. LendingClub CEO Scott Sanborn warned that Americans often underestimate the cost of credit card debt, noting that over half of consumers do not know the interest rates on their cards, which currently average over 22%. This environment has created a significant demand for personal loans for debt consolidation. PYMNTS
New Entrants Intensify Credit Card Competition
The credit card market saw new launches leveraging brand loyalty and embedded finance.
Booking.com introduced the Genius Rewards Visa Signature Credit Card, powered by Imprint. The no-annual-fee card offers up to 6% back in "Travel Credits" redeemable on the platform and provides an instant upgrade to the highest Genius loyalty tier. Booking.com News
Additionally, the rewards app Fetch announced the upcoming Fetch American Express Card, also powered by Imprint. Launching in Fall 2025, the card will reward everyday spending within the Fetch Points ecosystem, notably offering high rewards on grocery and retail purchases. PR Newswire
In Other News
(Lending) ABNB Federal Credit Union Selects Upstart for Personal Loans [Upstart]
(Macro) Household debt is on the rise [Marketplace]
(Earnings) Upstart Announces Results for Second Quarter 2025 [Upstart]
(Macro) Q2 NY Fed Report: Mortgage Originations by Credit Score, Foreclosures Decrease [Calculated Risk]
(Digital Banking) Credit Sesame taps Green Dot to expand digital banking [FinTech Global]
(Cards) LendingClub CEO Warns Americans Underestimate Credit Card Interest Costs [PYMNTS]
(Lending) Inside Synchrony's Home Brewed, Six-Second Credit Approval Process. So Long Credit Scores [The Financial Brand]
(BNPL) Google Adds New BNPL and Remittance Tools to Online Payments [PYMNTS]
(Marketing) Credit One Bank CMO on Building Brand Awareness With Humor and Education [Chief Marketer]
(Regulation) Trump issues Executive Order prohibiting ‘debanking’ [Consumer Finance Monitor]
(Fintech) How one personal finance site is taking on Google's AI bots [American Banker]
(Earnings) Marqeta turns to BNPL to boost revenue that's not from Block [American Banker]
(BNPL) Why BNPL fintech Splitit is betting on big tech wallets [American Banker]
(Fintech) How Zilch Cuts Losses 79% as UK Fintech Eyes Profitability [FinTech Magazine]
(Regulation) Fed to scrap program devoted to policing banks on crypto, fintech activities [Reuters]
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