PayPal Applies for Utah Bank License to Launch PayPal Bank

Payments company PayPal (PYPL) has applied for a Utah industrial bank license. The goal is to create a lending arm called PayPal Bank to more efficiently serve small businesses.

Payments giant PayPal has applied to regulators to establish an industrial bank in Utah. The company filed applications with the Utah Department of Financial Institutions and the Federal Deposit Insurance Corporation (FDIC). The intention is to create a lending arm known as PayPal Bank.

PayPal Moves to Strengthen Small Business Financing with Bank Proposal

The company, which also operates the PYUSD stablecoin, plans on “providing business lending solutions” for small businesses. Furthermore, it intends to provide other customers with interest-bearing savings accounts. The setting up of the bank would help PayPal put down less dependence on third parties for lending and settlement activities.

Since 2013, PayPal has offered access to more than $30 billion in loans and working capital. This money has gone up to the cost of more than 420,000 business accounts around the world. The company is helping fill a critical gap for small businesses who want access to capital with the goal 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 the capital to grow and scale continues to be a major challenge faced by small businesses,” Chriss said. Creating PayPal Bank would allow the company to offer business lending solutions more efficiently 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 to better expand to support the growth of small businesses and economic opportunities all across the U.S.

In addition to offering small business lending solutions, PayPal Bank expects to offer interest-bearing savings accounts to its customers. If approved, customer deposits at PayPal Bank would be eligible for the protection (FDIC) insurance. This offers another layer of safety and trust to consumers.

The proposed bank also intends to pursue direct membership in the US with card networks. This will serve as a complement to processing and settling activities using the existing banking relationships.

Mara McNeill Selected as PayPal Bank President

Mara McNeill has been chosen to be the President of PayPal Bank. She has more than 25 years of job experience in financial services. Her background is in banking, commercial lending and private equity.

Before his appointment with PayPal, McNeill was the President and CEO of Toyota Financial Services. Her background of being at the helm of a major regulated financial institution is expected to be key. It will help with the process for regulatory approval.

This application is common to a broader trend. Many financial technology and cryptocurrency companies are returning to bankers seeking banking charters. They want to have better control of their financial operations. Ultimately, if it is approved, the move will add a lot of strength to PayPal’s small-business lending platform. It will also increase its integration with the core U.S. financial system.

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