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Business Operations Business Models

How Does Acorns Make Money (Business and Revenue Model)

The Acorns business model

Acorns logo
Here’s what you should know:
  • What is Acorns, and how does Acorns work?
  • How does Acorns make money?
  • Subscription Revenue (Platform Fees)
  • Interchange Fees (Acorns Visa Debit Card)
  • Acorns subsidiaries, acquisitions, and exits
  • Acorns profit and revenue
  • What is the Acorns business and revenue model?
  • Acorns funding, net worth, and valuation

How does Acorns make money? Here is a full, in depth, breakdown of their two (2) revenue streams and the different products and services they offer, as well as the Acorns business and revenue model, how much money Acorns makes per year, and how Acorns works.

What is Acorns, and how does Acorns work?

Acorns is a financial service company that allows users to automatically round up purchases and invest the spare change for them.

Founded in 2012 by Jason Martell, Jeff Cruttenden, Mark Dru, and Walter Cruttenden, Acorns now has more than 11 million customers and over $4.7 billion in assets under management (AUM), to date.

So, how does Acorns work? To use Acorns, you can simply start by downloading their app from the Apple App Store or Google Play store, creating an account, and linking your bank account(s).

Once you’re set up, you can immediately begin investing your spare change automatically (if you opt-in) when you spend. These funds will be transferred from your primary checking account and into different exchange-traded funds (ETFs) with more than 7,000 stocks and bonds.

Some of Acorns’ competitors include Digit, DaveChimeMint, Ally, Betterment, SoFi, Weathfront, Qapital, Stash, Personal Capital, and other savings and budgeting apps.

Acorns App in Apple App Store | Acorns Business Model | How Does Acorns Make Money? | How does Acorns work?
Source: Apple App Store | Acorns

How does Acorns make money?

According to Acorns, Acorns has more than 11 million customers and over $4.7 billion in assets under management (AUM).

So how does Acorns make money off of all those users and assets under management (AUM)?

Below is a breakdown of how much money Acorns makes and its revenue model. Including all revenue streams and how much they charge for their services.

Here are the 2 ways of how Acorns makes money in 2022

Acorns has a revenue model that makes money in two (2) ways; through subscription revenue and interchange fees they collect from their Acorns Visa issued debit card transactions.

#1. Subscription Revenue (Platform Fees)

Acorns makes most of its money through the subscription revenue it collects from all users on the platform.

There is no free version of Acorns and Acorns charges all of its users $3 to $5 per month, depending on the plan they choose, for access to use their services.

And for that $3 to $5 per month fee, users will get access to all of their products such as ‘Acorns Invest’ which automatically rounds up and invests users’ spare change from each purchase they make, ‘Acorns Banking’ which is an Acorns checking account with its own set of perks for users, and more – depending on the monthly plan they choose. Which you can see more of below.

As noted above, Acorns has at least 11 million customers on its platform. And as mentioned, Acorns do not offer a free tier. This means that all of their 11+ million users are each paying $3 or $5 per month, which comes out to somewhere between $33 to $55 million of subscription revenue per month for the company. Totaling a minimum of $396 million per year.

On September 21, 2021, Acorns increased its minimum subscription pricing from $1 per month to $3 per month. Because of this, Acorns offers ‘Acorns Assist’ which allows select users falling on economic hardships to continue paying just $1 per month for ongoing access to their services.

How much does Acorns cost? (Acorns subscription fee)

  • Acorns Personal: $3 per month
  • Acorns Family: $5 per month

Note: Acorns has 11+ million users paying at least $3 per month for their services.

#2. Interchange Fees (Acorns Visa Debit Card)

Acorns also makes money off of the interchange fees they receive from their Acorns debit cards that are issued to users who have Acorns accounts.

How does Acorns make money from interchange fees? Acorns makes money whenever an Acorns cardholder swipes their Visa issued debit card.

When this happens, Visa charges the merchant an interchange fee between 1.15% + $0.05 to 2.40% + $0.10 of the charge amount. From that, Visa gives a percentage of its interchange fee revenue to Acorns. Although it’s unclear what percentage Acorns receives from Visa.

Acorns Visa Debit Card | Acorns Business Model | How Does Acorns Make Money | How Does Acorns Work
Source: Acorns

Acorns subsidiaries, acquisitions, and exits

To date, Acorns has made a total of 3 acquisitions.

Mergers and acquisitions business model
Source: Crunchbase | Acorns

Acorns profit and revenue

Acorns’ last reported earnings came in 2020 when they brought in an estimated $71 million in revenue. Since then, Acorns’ has not released any official reports in regards to company earnings.

Note: Because Acorns is a privately held company, they are not required to make their annual reporting, such as Form 10-K’s, pubic.

What is the Acorns business and revenue model?

Acorns makes money through a few revenue models that they combine within their company, they are:

  • Subscription business model
  • Fee for service (FFS) business model
  • Business to business (B2B) business model
  • B2B2C (partnerships) business model
  • Mergers and acquisitions (M&A) business model

Acorns funding, net worth, and valuation

According to Acorns’ Crunchbase profile, Acorns has raised $507 million over 10 rounds and has a valuation of $1.9 billion as of March 2022.