PayPal is aiming to deepen its role in small business finance by applying for a US banking license.
Key Takeaways
- PayPal has applied to create a Utah-based industrial bank called PayPal Bank, pending approval from federal and state regulators.
- The move is designed to enhance lending and savings services for small businesses and reduce PayPal’s reliance on third-party institutions.
- If approved, PayPal Bank will offer FDIC-insured deposits and interest-bearing savings accounts.
- The announcement comes as part of PayPal’s broader strategy to compete with fintech rivals and traditional banks.
What Happened?
PayPal has submitted formal applications to the Federal Deposit Insurance Corporation (FDIC) and the Utah Department of Financial Institutions (UDFI) to form an industrial loan company named PayPal Bank. The bank would focus on offering small business loans and interest-earning savings accounts, with customer deposits potentially qualifying for FDIC insurance.
Thanks to fewer regulatory restrictions, PayPal is applying to be a US bank, but the timing is a lil interesting.
— Morning Brew ☕️ (@MorningBrew) December 16, 2025
The company is seeking a US bank charter and, if approved, would launch a Utah-chartered industrial loan company.
That would allow it to lend more directly to small… pic.twitter.com/bWlOd6e8xB
PayPal’s Push Into Banking
The creation of PayPal Bank marks a major milestone in the company’s efforts to expand beyond payment processing and into core financial services. This move aligns with the company’s long-term mission to provide more direct and efficient financial solutions to the small businesses it serves.
According to PayPal, the company has already provided over $30 billion in loans and working capital to more than 420,000 businesses worldwide since 2013. These efforts have helped fill a critical funding gap for small businesses looking to scale, invest in infrastructure, or manage inventory.
PayPal CEO Alex Chriss emphasized the opportunity, saying:
If approved, PayPal Bank will also seek direct membership in card networks, complementing its existing relationships with financial institutions for payment processing and settlement services.
Regulatory Path and Leadership
PayPal Bank will be chartered in Utah, which has become a hub for industrial loan companies. The proposed bank will operate under industrial bank rules, which are slightly different from those governing traditional commercial banks. These rules permit companies like PayPal to offer banking services without being subject to the same ownership restrictions as standard banks.
The company announced that Mara McNeill will serve as President of PayPal Bank. McNeill brings more than 25 years of experience in banking and commercial lending, including her role as President and CEO of Toyota Financial Savings Bank.
The application comes during a broader trend of fintech and even non-financial companies seeking to establish banks under increasingly supportive regulatory environments. The Office of the Comptroller of the Currency (OCC) recently approved applications from several crypto firms to form trust banks, and companies like Nissan and Sony have also expressed interest in forming banks.
CoinLaw’s Takeaway
In my experience covering fintech, this is a bold and overdue move by PayPal. The company has long acted like a bank in many ways, offering credit lines, wallets, and payment services, but without the formal structure. If PayPal Bank gets approved, it could unlock more direct, cost-effective services for small businesses that struggle to access credit from traditional banks. I found it particularly promising that PayPal wants to reduce its reliance on third-party institutions. That could mean faster approvals, lower fees, and better customer experiences. This could also pressure traditional banks to step up their digital offerings.
