PayPal – the American multinational financial technology company has applied to set up PayPal Bank. Currently, PayPal operates an online payment system in the majority of countries that support online money transfers.
The digital payments company has applied to set up PayPal Bank, a Utah-based industrial loan company. For this, PayPal has submitted applications to the Utah Department of Financial Institutions and the US Federal Deposit Insurance Corporation (FDIC). If approved, this would allow PayPal to operate like a regulated bank in the country.
PayPal says the new bank will help strengthen its business and improve efficiency. The company believes this move will allow it to better support small businesses and create more economic opportunities across the US.
Under the plan, PayPal Bank would offer small business loans and interest-earning savings accounts to customers. It would also become a member of US card networks, helping PayPal handle card processing and settlements more smoothly, alongside its existing banking partners.
History of PayPal
The company was originally established by Max Levchin, Peter Thiel, and Luke Nosek in December 1998 as Fieldlink. Later it was renamed Confinity, a company which developed security software for hand-held devices. When it had no success with that business model, it switched its focus to a digital wallet. The first version of the PayPal electronic payments system was launched in 1999.
PayPal already has a strong lending presence. Since 2013, the company says it has provided more than $30 billion in loans and working capital to over 420,000 business accounts worldwide. By launching its own bank, PayPal aims to deliver business loans more efficiently in the US, reduce dependence on third-party banks, and strengthen its overall financial services business.
If regulators give their approval, deposits held with PayPal Bank would be protected by FDIC insurance, adding an extra layer of safety for customers. This move could mark a major shift for PayPal as it expands beyond payments into full-scale banking services.
PayPal has selected Mara McNeill to serve as PayPal Bank’s president. She comes with over two decades of experience in banking and commercial lending, and has previously served as the CEO of Toyota Financial Savings Bank.
