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The move would allow the firm to originate loans directly, hold customer deposits, and access payment networks without relying on third-party partners.
PayPal has submitted applications to both Utah regulators and the FDIC to establish an industrial bank in the US, marking a dramatic expansion beyond its traditional payment processing roots.
The move would allow the company to originate loans directly, hold customer deposits, and access payment networks without relying on third-party banking partners. CEO Alex Chriss emphasized the urgency behind this decision, stating that securing capital remains a significant challenge for small businesses trying to grow and scale.
This isn’t some experimental side project — PayPal is building on over a decade of lending experience.
Since 2013, PayPal says in the announcement that it has provided access to over $30 billion in loans and working capital to more than 420,000 business accounts worldwide. Their PayPal Working Capital program launched over a decade ago, but they’ve been constrained by having to work through partner banks like WebBank.
Nearly 70% of PayPal’s 2022 small business loans went to low- and middle-income areas. One-third of the total loan value reached census tracts where minorities make up more than half the population.
But here’s the real kicker: More than half of their loan value went to zip codes where 10 or more bank branches had closed between 2017 and 2022. PayPal isn’t just competing with traditional banks — they’re focusing on communities that banks have essentially abandoned.
The proposed PayPal Bank wouldn’t just focus on business lending — they’re planning to offer interest-bearing savings accounts to customers, putting them in direct competition with traditional banks. If approved, customer deposits would be eligible for FDIC insurance coverage, giving PayPal the same regulatory protections as traditional banks.
PayPal has already tapped Mara McNeill, former CEO of Toyota Financial Savings Bank, to serve as the new bank’s president, bringing over 25 years of financial services experience to the role. McNeill’s appointment signals this isn’t a tech experiment — it’s a serious financial services play.
In fact, companies like Nissan Motor’s financing arm and Sony Group have also submitted banking applications since the current administration took office. PayPal is riding a wave of renewed interest in banking licenses, but with a massive head start in understanding small business needs. Imagine getting a business loan in 24 hours with better rates than your local bank — that’s the kind of disruption we’re talking about.
The banking application comes as PayPal rapidly expands its cryptocurrency operations, though its official statement didn’t specifically address how crypto might fit into their banking strategy. Since 2020, the company has focused on integrating crypto and stablecoins directly into its payments and settlement infrastructure, rather than treating digital assets as standalone products.
Last July, PayPal enabled merchants to accept Bitcoin and Ethereum at checkout with automatic conversion to fiat currency. Earlier this month, they expanded their PYUSD stablecoin to allow US YouTube creators to receive earnings through the token.
With a banking charter, PayPal could potentially offer even more sophisticated crypto-integrated financial services while maintaining regulatory compliance. The company has systematically built the infrastructure to bridge traditional finance and digital assets — a banking license could be the final piece that lets them offer services no traditional bank can match.
Over in the UK, cryptocurrencies are set to be regulated much like stocks, shares, and other mainstream investment products.
