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Business Models Business Operations

How Does Digit Make Money (Business and Revenue Model)

The Digit business model

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

How does Digit make money? Well, here is a full, in depth, breakdown of their four (4) revenue streams and the different products and services they offer, as well as the Digit business and revenue model, how much Digit makes per year, and how Digit works.

What is Digit, and how does Digit work?

Digit is an all-in-one finance app that helps its members automatically manage and budget their money for spending, bills, savings, and investing based on their individual financial situation and goals.

Founded in 2013 by Ethan Bloch, Digit went on later to get acquired by Oportun on November 16, 2021, for $212.9 million.

Since that time, Digit has now saved more than $7.6 billion towards 14+ million savings goals that have been set up by its members since being founded back in 2013.

So, how does Digit work? To start using Digit, you need to first download their app on the Apple App Store or Google Play store, create an account, and link your bank account(s).

Once you’re all set up, you can start using Digit to do things like creating personal savings goals, investing in personalized ETFs and IRAs, and more.

Some of Digit’s competitors include Dave, Acorns, Chime, Mint, Ally, Betterment, SoFi, Qapital, Stash, Personal Capital, and other savings and budgeting apps.

Digit App in Apple App Store | Digit Business Model | How Does Digit Make Money? | How Does Digit Work?
Source: Apple App Store | Digit

How does Digit make money?

Digit has not released any info in regards to how many members they have, assets under management (AUM), etc. But according to Digit, the company has saved more than $7.6 billion towards 14+ million savings goals that have been set up by its members since its founding back in 2013.

So how does Digit make money off of all of this?

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

Here are the 4 ways of how Digit makes money in 2022

Digit has a revenue model that makes money in four (4) ways; by charging all of its users’ monthly platform fees, instant withdrawal fees, interchange fees from their Digit debit card, and interest on uninvested cash sitting in users’ accounts.

#1. Subscription Revenue (Platform Fees)

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

There is no free version of Digit. After a 6-month free trial, Digit charges all of its users $5 per month to continue using their services.

And for that $5 per month fee, users will get be able to set up automated savings, create goals to save for a vacation or emergency fund, invest in personalized ETFs and IRAs, no account minimums, their low balance protection feature, and more.

How much does Digit cost? (Digit subscription fee)

  • $5 per month
Digit App | Digit Business Model | How Does Digit Make Money? | How Does Digit Work?
Source: Digit

Note: There is no free version of Digit. After the 6-month free trial is up, Digit costs $5 per month for all of its users.

#2. Instant Withdrawal Fees

Digit also makes money from its instant withdrawal fees.

While traditional Digit withdrawals are free to use (1 to 3 business days), users can also choose to get their money quicker with instant withdrawals (within 30 minutes) for an additional cost of $0.99 per instant withdrawal.

How much are the Digit withdrawal fees?

  • $0.99 per instant withdrawal

#3. Interchange Fees (Digit Debit Card)

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

How does Digit make money from interchange fees? Digit makes money whenever a Digit 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 Digit. Although it’s unclear what percentage Digit receives from Visa.

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

#4. Interest on Uninvested Cash

In addition to all the revenue Digit makes from all the various fees, Digit also makes money through the interest they earn on the money sitting in users’ Digit accounts.

How does Digit make money and earn interest from this? It’s common for a bank or financial institution to lend out the money sitting in their members’ checking/savings accounts to other financial institutions. Those financial institutions then pay Digit interest on that money in return.

This is known as Net Interest Margin (NIM). And nationally it was 2.56% for all U.S. banks as of Q1 2021, according to a press release from the FDIC.

Digit profit and revenue

Digit has not released any official reports in regards to company earnings.

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

What is the Digit business and revenue model?

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

  • Freemium (upselling) business model
  • Subscription business model
  • Transaction based business model
  • Subscription business model
  • Business to business (B2B) business model
  • B2B2C (partnerships) business model
  • Mergers and acquisitions (M&A) business model

Digit funding, net worth, and valuation

Digit’s Crunchbase profile shows Digit has raised $66.3 million over 6 rounds.

On November 16, 2021, Digit was acquired by Oportun for $212.9 million.

Digit subsidiaries, acquisitions, and exits

To date, Digit has not made any acquisitions, investments, or exits.