A global online payment system, PayPal has already submitted applications to the Utah Department of Financial Institutions and the Federal Deposit Insurance Corporation (FDIC) to set up PayPal Bank, a proposed Utah-chartered industrial loan firm.
“Securing capital remains a significant hurdle for small businesses striving to grow and scale,” Alex Chriss, president and CEO of PayPal, said in a company statement on Dec. 15. “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.”
PayPal has already provided more than $30 billion in loans and working capital to more than 420,000 business accounts globally since 2013. The company added that the PayPal Bank would be able to fill a “critical gap for small businesses” that need capital to expand, purchase additional inventory, or make investments in personnel or equipment.
The company is proposing that it would be able to provide small business loans more efficiently and reduce reliance on third parties. PayPal also plans to offer interest-bearing savings accounts to its customers. In addition, PayPal stated that it would introduce direct membership with card networks to complement processing and settlement activities through existing banking relationships.
If its plans are given the green light, customer deposits at PayPal Bank would be eligible for FDIC insurance coverage, which protects up to $250,000 per depositor, per insured bank.
PayPal has already named Mara McNeill as PayPal Bank’s president. McNeill brings more than 25 years of experience in financial services, including banking, commercial lending, and private equity. Prior to joining PayPal, she served as president and CEO of Toyota Financial Savings Bank.
PayPal has been in business for the past 25 years and remains at the forefront of digital commerce. It currently serves more than 200 markets worldwide.
The OCC conditionally approved applications for de novo national trust bank charters for First National Digital Currency Bank and Ripple National Trust Bank. In addition, it conditionally approved applications to convert from a state trust company to a national trust bank for BitGo Bank and Trust, National Association, Fidelity Digital Assets, National Association, and Paxos Trust Company, National Association.
“New entrants into the federal banking sector are good for consumers, the banking industry and the economy,” Comptroller of the Currency Jonathan V. Gould said in a statement on Dec. 12. “They provide access to new products, services and sources of credit to consumers, and ensure a dynamic, competitive and diverse banking system.”
The federal banking system includes more than 1,000 national banks, federal savings associations, and federal branches of foreign banking organizations operating in the United States. They range from 1,000 smaller community banks under $30 billion in assets to the largest internationally active banks.