PayPal Bank on cards? Global payments giant seeks banking charter amid lending push in US — all you need to know

PayPal Bank: Global online payments giant PayPal Holdings announced that the company has submitted an application to the Utah Department of Financial Institutions and the Federal Deposit Insurance Corporation (FDIC) seeking to set up ‘PayPal Bank,’ which will be registered as a chartered industrial loan company.

“PayPal Holdings, Inc. (NASDAQ: PYPL) today announced it has submitted applications to the Utah Department of Financial Institutions and the Federal Deposit Insurance Corporation to establish PayPal Bank, a proposed Utah-chartered industrial loan company,” it said in an official statement.

PayPal's banking plans

In its announcement on 15 December, PayPal also disclosed that since 2013, the online payments platform has extended $30 billion in loans and working capital to more than 4,20,000 business accounts around the world.

If the charter is approved, PayPal aims to expand its lending solutions business to small business operators across the United States, in turn, reducing small businesses' reliance on third-party lenders.

PayPal also recognised that there is a ‘critical gap’ for small businesses looking for capital to buy inventory or invest in their operations.

“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,” said Alex Chriss, President and Chief Executive Officer, PayPal.

According to multiple US-based news agencies, PayPal's move to apply for a banking charter comes amid a broader push for fintech and crypto companies seeking a banking licence to expand their business.

What will PayPal Bank offer to customers?

If PayPal Bank is approved by the US government regulators, then the company also aims to offer interest-bearing savings accounts to its customers, in addition to focusing on its small business lending operations.

In its official statement, the payments giant also disclosed that the PayPal Bank will seek to create direct memberships with the card networks to assist in their processing and settlement activities through existing banking relationships.

The customers will also be eligible for FDIC insurance coverage post the potential approval of the banking charter. According to the regulator's website, the FDIC insurance coverage protects customers' money up to $250,000 per person per bank for each account.

“Depositors may qualify for coverage over $250,000 if they have funds in different ownership categories and all FDIC requirements are met,” according to the Federal Deposit Insurance Corporation website.

If approved, the company has selected Mara McNeill as the President of PayPal Bank, who has an industry experience of more than 25 years working in banking, commercial lending and private equity. Before joining PayPal, McNeill was the President and CEO of Toyota Financial Savings Bank.

What is a chartered industrial loan company?

PayPal has applied to become a chartered industrial loan company, which means an industrial bank which is either state or nationally chartered, where the entity is usually owned by a commercial company, and is not regulated by a federal banking agency.

According to Investopedia data, Industrial banks accept deposits from customers and have the authority to provide loans to them and small businesses, as part of their lending operations.

These Industrial banks are also known as industrial loan companies, which are only chartered in a few states, like Utah, which reportedly provides the majority of charters for industrial banks in the United States.

Push for banking

PayPal's application for a banking charter comes amid an overall push for lending in the United States under the new Donald Trump administration, which took charge in January 2025.

According to a recent Bloomberg report, interest in financial companies looking to become banks has surged compared to the previous Biden administration in America. As per the agency report, very few applications were being submitted at that time, and even fewer were considered for approval.

Last week, US-based cryptocurrency giants such as Ripple and Circle received preliminary approval from the Office of the Comptroller of the Currency, a US banking regulator, to establish national trust banks, a major move to integrate digital assets into the banking system, reported Reuters on Saturday.

On Friday, the regulator approved the national trust bank charter for Ripple and Circle, while conditionally approving applications for companies like BitGo, Paxos and Fidelity Digital Assets to convert their state trust bank charters to national charters, a move which will take their operations across America.

However, the report also highlighted that the regulator must sign off with final approval before each of the trust banks can operate in the country.