PayPal Aims to Become Regulated Bank to Strengthen Small Business Lending and Payment Systems

PayPal Moves to Become a US Bank to Expand Lending and Savings

PayPal Holdings Inc. has taken a major step towards becoming a fully regulated bank in the United States, submitting applications on 15 December 2025 to establish PayPal Bank, a Utah-chartered industrial loan company.

The move would allow the payments giant to broaden its offerings beyond digital transactions and gain greater control over lending, savings, and financial infrastructure.

Will PayPal Lend Directly to Small Businesses

If approved, PayPal Bank would be able to lend directly to U.S. small businesses, reducing reliance on third-party banking partners.

Currently, the company provides loans through partner banks, but bringing this activity in-house would mark a significant shift in its business model.

Since 2013, PayPal has lent over $30 billion in working capital to more than 420,000 businesses, and a bank charter would allow the company to manage much of this lending itself.

Interest-Bearing Savings Accounts Could Arrive Soon

PayPal also plans to introduce interest-bearing savings accounts for consumers, a first for the company.

This expansion would extend PayPal’s services beyond digital wallets and payments, offering customers a more traditional banking experience while integrating with its existing digital platform.

FDIC Insurance and Infrastructure Control on the Horizon

Alongside the bank charter application, PayPal has filed with the Federal Deposit Insurance Corporation (FDIC) to ensure that customer deposits would qualify for federal insurance.

The bank status would also allow direct membership in U.S. card networks, giving PayPal stronger control over payment processing and settlement while reducing reliance on intermediaries.

Leadership in Place as Regulatory Environment Evolves

PayPal has named Mara McNeill as president of the proposed bank, signalling that leadership planning is underway ahead of regulatory approval.

Mara McNeill

The application comes amid a broader shift in the U.S. regulatory landscape.

Last week, the Office of the Comptroller of the Currency (OCC) granted national trust bank charters to five digital asset firms, including Circle, Ripple, and Paxos, the issuer of PayPal’s PYUSD stablecoin.

Analysts note that a bank charter could eventually strengthen PYUSD’s integration into the regulated financial system, supporting broader institutional and consumer use over time.

What It Means for PayPal’s Market Position

CEO Alex Chriss said,

“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.”

Shares of PayPal rose 1.5% in extended trading following the announcement.

The company reported quarterly revenue of $8.42 billion in October, up 7% from a year earlier, surpassing analysts’ expectations.

However, PayPal’s stock has fallen roughly 29% in 2025, compared with a nearly 16% gain in the S&P 500 over the same period.

Are Other Fintechs Also Eyeing Banking Licences

PayPal is not alone in exploring banking licences.

Wise is considering a UK banking licence and has also applied to the U.S. OCC to establish a national trust bank in Texas for direct U.S. dollar settlements with the Federal Reserve.

In contrast, UK regulators are holding Revolut’s full banking licence due to concerns over risk controls amid the fintech’s international expansion, leaving the company operating under a restricted mobilisation licence since last year.

PayPal’s Strategic Shift Signals Broader Ambitions

By seeking a bank charter, PayPal aims to expand its credit and savings offerings while consolidating control over payments infrastructure.

This represents one of the most significant transformations in the company’s business model since its founding, positioning it to compete more directly with traditional banks and growing fintech rivals.