For years, PayPal has sat at the edges of banking, moving money without officially being a bank. That could soon change. The company has applied to launch a federally insured bank in the U.S., a step that would pull it deeper into the heart of the financial system.
PayPal has been working through the regulatory process, filing applications with the FDIC and Utah’s banking regulators to establish a Utah-chartered industrial loan company to be known as PayPal Bank.
The proposed bank would allow PayPal to broaden its small-business lending business and offer FDIC-insured deposit accounts directly to customers. A U.S. banking license would also let the company fund loans from its own balance sheet, hold customer deposits, and potentially introduce products such as interest-bearing savings accounts.
“Securing capital remains a significant hurdle for small businesses striving to grow and scale,” said PayPal CEO Alex Chriss. “Establishing PayPal Bank will strengthen our business and improve our efficiency, enabling us to better support small-business growth and economic opportunities across the U.S.”
PayPal already has a sizable lending business, having provided more than $30 billion in loans and capital to over 420,000 businesses since 2013. The company also holds a banking license in Luxembourg that oversees its European offerings, but a U.S. charter would place its main lending and deposit operations under domestic regulators.
To lead the proposed bank, PayPal has tapped Mara McNeill, the former chief executive of Toyota Motor Corp.’s financing division, as the slated inaugural president of PayPal Bank.
PayPal isn’t alone in making this move. A growing number of fintech and crypto companies are chasing official banking recognition, and in recent weeks, Circle, Ripple, and Paxos have all landed early approvals to operate under federal oversight.
The trend has gained speed following signals from the Trump administration that it would take a more flexible view of financial innovation. Companies such as Nissan Motor Co.’s financing arm and Sony Group Corp. have also pursued industrial loan charters, which enable non-financial firms to carry out certain banking operations.
Regulators have also given the green light to new banks backed by technology investors. In October, the Office of the Comptroller of the Currency approved Erebor, a bank created by a group of Silicon Valley entrepreneurs with ties to the former administration.
“New entrants into the federal banking sector are good for consumers, the banking industry, and the economy,” Comptroller of the Currency Jonathan Gould said in a statement last week. “They provide access to new products, services, and sources of credit to consumers, and ensure a dynamic, competitive, and diverse banking system.”
If PayPal does make the jump to banking, it’s another sign of how blurred the lines have become between finance and tech. Approval would place PayPal alongside a handful of digital-first companies that are now turning into full-fledged, regulated financial platforms.
The move would likely bolster PayPal’s small-business offerings while further narrowing the gap between payment processing, credit access, and money storage for consumers. With the applications now under regulatory review, the industry will be watching closely to see whether PayPal becomes a U.S.-chartered bank.
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