Payment giant PayPal has applied to regulators to establish an industrial bank in Utah. The company has filed applications with the Utah Department of Financial Institutions and the Federal Deposit Insurance Corporation (FDIC). The intention is to establish a credit department known as PayPal Bank.
PayPal will strengthen small business financing with a banking proposal
The company, which is also the PYUSD stablecoin, plans to “provide business credit solutions” for small businesses. In addition, it wants to offer other customers interest-bearing savings accounts. The creation of the bank would help PayPal reduce its dependence on third parties for lending and settlement activities.
Since 2013, PayPal has provided access to more than $30 billion in loans and working capital. This money has risen to the cost of more than 420,000 business accounts around the world. The company helps fill a critical gap for small businesses looking to access capital for the purpose of expanding, purchasing inventory or investing in tools.
New bank will strengthen business and efficiency
PayPal CEO and President Alex Chriss commented on the strategic move. “Finding capital to grow and scale remains a major challenge for small businesses,” said Chriss. The creation of PayPal Bank would allow the company to more efficiently provide business lending solutions to small businesses in the US.
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Chriss added that the bank “will strengthen our business and make us more efficient.” This will help PayPal better expand to support small business growth and economic opportunity across the US
In addition to offering small business lending solutions, PayPal Bank expects to offer its customers interest-bearing savings accounts. If approved, customer deposits with PayPal Bank are eligible for FDIC protection insurance. This offers consumers an extra layer of security and confidence.
The proposed bank also plans to pursue direct U.S. membership through card networks. This will complement processing and settlement activities utilizing existing banking relationships.
Mara McNeill selected as president of PayPal bank
Mara McNeill has been elected president of PayPal Bank. She has more than 25 years of work experience in financial services. Her background is in banking, commercial lending and private equity.
Before joining PayPal, McNeill was president and CEO of Toyota Financial Services. Her background as an executive at a large regulated financial institution is expected to be crucial. It will help in the regulatory approval process.
This application is common in a broader trend. Many financial technology and cryptocurrency companies are turning to bankers seeking banking charters. They want to have better control over their financial activities. If approved, this move will ultimately add a lot of power to PayPal’s small business lending platform. It will also increase its integration with the core US financial system.
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