May 14 (Reuters) - U.S. digital bank Chime is launching

a product that will allow customers to access up to $500 of

their wages before payday, the latest move by a financial

technology company to enter the fast-growing "earned wage

access" market.

The product, which will be rolled out in coming months,

comes as Chime is preparing to become a public company in the

"not too distant future," CEO Chris Britt said in an interview

with Reuters.

Earned wage access (EWA) products enable workers to receive

a portion of their wages ahead of payday, often via a membership

service or for a fee. Providers say the products offer crucial

assistance to Americans living paycheck-to-paycheck,

particularly gig workers and freelancers. Critics say the

products do not have the same consumer protections as loans.

Chime says the product - called MyPay - has no mandatory

fees or interest and does not require a credit check. MyPay

estimates a customer's wages for the cycle based on historical

data and offers the person up to $500 of the forecast earnings.

Chime is known for products that offer users' short-term

liquidity, like its fee-free overdraft service.

"We think it's a natural extension of what we've been good

at," Britt said.

While Chime did not disclose if it planned to generate

revenue on the new product, the company anticipates MyPay will

drive greater engagement and product usage among its current

customers and will also prove successful for customer

acquisition, said Britt.

As EWA has grown in popularity, it has drawn scrutiny of

regulators, who have debated whether the product should be

classified as a loan. Such a classification would impose

interest rate caps and require additional disclosures.

Several states, including Wisconsin and Nevada, have

established licensing regimes for the products, stipulating that

they are not loans.

The U.S. Consumer Financial Protection Bureau indicated late

last year that it would soon issue guidance on how consumer

lending laws should apply to EWA, but said it was also

supportive of states creating oversight frameworks for EWA.

Chime has long been thought of as a likely candidate for

an initial public offering next year, having lined up Goldman

Sachs in 2022 for early preparations.

It has 7 million monthly active users and was profitable in

the first quarter of this year, Britt said.

"It's unlikely to be this year, but we are for the most

part IPO-ready," he said. "This year is mostly heads down,

continuing to get even more momentum with our suite of

products."