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PayPal has applied to become a bank in the US, the latest fintech seeking to capitalise on the Trump administration’s more permissive approach to financial industry oversight.
The payments company on Monday said it submitted applications to the Utah Department of Financial Institutions and the Federal Deposit Insurance Corporation to create PayPal Bank. Becoming a bank would help it increase its lending to small businesses, the company added.
“Securing capital remains a significant hurdle for small businesses striving to grow and scale,” said chief executive Alex Chriss. “Establishing PayPal Bank will strengthen our business and improve our efficiency, enabling us to better support small business growth and economic opportunities across the US.”
PayPal, which was founded in 1998 by prominent tech executives including Elon Musk and Peter Thiel, had extended more than $30bn in loans and capital to more than 420,000 business customers globally since 2013, the company said. Securing a US banking licence would allow it to reduce its reliance on third parties and provide its customers with FDIC insurance on their deposits.
PayPal’s application comes after a number of crypto companies and neobanks have this year sought to take advantage of the Trump administration’s openness to non-traditional financial companies entering the regulated banking sector. Some groups have sought charters in order to eventually issue stablecoins.
Companies including Brazilian digital lender Nubank and crypto exchange Coinbase are among those who have applied for banking charters this year. The Office of the Comptroller of the Currency last week said it had granted conditional approval for banking to Ripple and Fidelity Digital Assets for a banking charter.
US regulators in October also approved the launch of Erebor, a bank backed by a group of high-profile tech billionaires with ties to the Trump administration, that sought to fill a gap left by the collapse of Silicon Valley Bank.
“New entrants into the federal banking sector are good for consumers, the banking industry and the economy,” said Comptroller of the Currency Jonathan Gould in a statement last week. “They provide access to new products, services and sources of credit to consumers, and ensure a dynamic, competitive and diverse banking system.”
PayPal, which already has a banking licence in Luxembourg, said it had selected the former chief executive of Toyota’s financing business, Mara McNeill, to head the regulated entity if it were to be approved.
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