In its early stages, the goal of the apps was to solve the problem of overdraft fees, so they raised $3 million in a seed round. Users could then borrow money directly from Dave and repay it with their next paycheck. They worked with over 3,000 banks to achieve this. By partnering with such institutions as TD Bank, Dave and Earnin were able to quickly gain traction. But how do they make money?
The first feature that made Dave and Earnin popular is their cash advance service, which allows customers to borrow money before they get their paychecks. The app keeps track of customer spending and sends a special notification when a customer goes overdrawn. The app offers email and postal support to users and markets to employees. Both Earnin and Dave have similar business models and help people overcome financial hardships. But one main difference is the way these two companies make money.
While the monthly membership fee for Dave is lower than for other cash advance apps, the average person who uses the app will have to wait three business days for the money to clear. It costs $1.99 to get a loan instantaneously, but that’s a lot less than the standard fees of other cash advance apps. Dave users can borrow up to $250 per pay period but cannot extend the repayment date.