Prime Highlights
- PayPal has applied to set up PayPal Bank to expand into small business lending and broader banking services.
- The move is aimed at strengthening PayPal’s core operations and supporting long-term growth for small businesses.
Key Facts
- The application will be reviewed by the FDIC and Utah’s Department of Financial Institutions under U.S. banking laws.
- PayPal shares rose 1.5% after the announcement, while quarterly revenue increased 7% year-on-year to $8.42 billion.
Background
PayPal has applied for regulatory approval to establish PayPal Bank, a move that could allow the payments major to expand deeper into traditional banking services. The proposed bank will give loans to small businesses and offer other financial products to help the U.S. economy grow.
In a statement issued on Monday, PayPal said the application will be reviewed by the U.S. Federal Deposit Insurance Corporation (FDIC), along with Utah’s Department of Financial Institutions. If approved, PayPal Bank would operate as a regulated financial institution under U.S. banking laws.
PayPal Chief Executive Officer Alex Chriss said the move would strengthen the company’s core business and improve efficiency. He added that the bank would help PayPal better serve small businesses by expanding access to credit and financial tools that support long-term growth.
Along with small business lending, PayPal said it plans to offer interest-bearing savings accounts to customers. The company already provides credit lines to consumers and merchants, but the new bank would allow it to widen its range of banking-style services under one platform.
The development comes as PayPal faces growing competition from fintech firms that are challenging traditional banks with digital-first services. PayPal is applying for a banking license to compete more directly with established banks while keeping its strong digital payments services, including the popular Venmo app.
Investors reacted positively to the news, with PayPal shares rising 1.5% in extended trading.
In October, PayPal reported that its quarterly revenue rose 7% from last year to $8.42 billion, beating market expectations and showing steady demand for its payment services.