Varo Bank

Varo holds its own national bank charter from the Office of the Comptroller of the Currency, granted in July 2020. This allows it to hold customer deposits directly and originate loans on its own balance sheet — a model distinct from most fintechs, which rely on third-party sponsor banks. The charter subjects Varo to the same capital and regulatory oversight as incumbent national banks.

Because Varo is the bank of record, it retains the net interest margin on loans it originates instead of splitting income with a sponsor bank. Its revenue model blends interest income on credit products with interchange fees from its debit and credit card programs. The firm does not generate material fee income from monthly service or overdraft charges, which it publicly waives.

Varo offers three main credit products: Varo Advance, which provides cash advances up to $500 with flat-fee pricing; a line of credit up to $2,000 with no late or origination fees; and the Varo Believe Visa Credit Card, a secured card designed for credit building. All are booked directly by Varo and reported to the major credit bureaus.

Varo has raised over $1.0 billion in equity from backers including Warburg Pincus, The Rise Fund, Gallatin Point Capital, and Lone Pine Capital. The most recent disclosed round was a $510 million Series E in September 2021, led by Lone Pine, which valued the firm at roughly $2.5 billion at the time (per the firm, September 2021).

Varo does not operate physical branches but serves all 50 US states via a mobile platform with fee-free cash deposits available at over 7,500 CVS locations. Its high-yield savings account offers up to 5.00% APY on balances up to $5,000 and 2.50% APY on amounts above that threshold, per current public terms.

Varo forgoes several fee lines that contribute a material share of revenue at incumbent banks, including overdraft, monthly maintenance, and minimum-balance fees. The firm also avoids branch-occupancy costs by maintaining a fully digital interface. This lower cost base is intended to be offset by higher-margin credit products and a direct net-interest-margin capture model.

Publicly, Varo has not reported reaching sustained profitability. In February 2024, the firm conducted a restructuring including workforce reductions specifically aimed at accelerating the path to profitability and shifting focus away from user growth toward unit economics (per American Banker, February 2024).