Paypal Bank Plan Signals Major Expansion Beyond Payments

Payments giant Paypal took steps to broaden its role in U.S. financial services. Paypal Holdings, Inc. (Nasdaq: PYPL) announced on Dec. 15 that it submitted applications to establish a Utah-chartered industrial bank aimed at expanding support for small businesses.

The announcement states:

As proposed, Paypal Bank would enable Paypal to provide business lending solutions more efficiently to small businesses in the U.S., while reducing reliance on third parties and strengthening Paypal's business.

President and Chief Executive Officer Alex Chriss opined: "Securing capital remains a significant hurdle for small businesses striving to grow and scale." He added: "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."

The company detailed that since 2013 it has provided more than $30 billion in loans and working capital to over 420,000 business accounts worldwide, supporting expansion, inventory purchases, and investments in employees and operational tools.

Beyond lending, the announcement explains:

In addition to providing small business lending solutions, Paypal Bank expects to offer interest-bearing savings accounts to customers. Paypal Bank would also seek direct membership in the U.S. with card networks to complement processing and settlement activities through existing banking relationships.

If regulators grant approval, customer deposits at Paypal Bank would qualify for FDIC insurance coverage. Paypal also identified leadership for the proposed institution, selecting Mara McNeill to serve as president of Paypal Bank, bringing more than 25 years of experience across banking, commercial lending, and private equity, including her prior role as president and CEO of Toyota Financial Savings Bank.