PayPal Wants to Become a Bank

Fintech giant PayPal has applied for regulatory approval to launch PayPal Bank, expanding small business lending and interest-bearing savings as it pushes deeper into financial services.

PayPal’s Banking Ambitions Grow as Company Applies to Launch PayPal Bank

PayPal is taking a decisive step beyond payments. On Monday, the company said it has applied for approval to form PayPal Bank, a move that would allow it to offer loans to small businesses and savings accounts that pay interest. The effort reflects a broader push by fintech firms to claim more ground traditionally held by banks, at a time when payments alone no longer define the business.

“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 CEO Alex Chriss said in a statement.

The U.S. Federal Deposit Insurance Corporation will review the application alongside Utah’s Department of Financial Institutions. If approved, PayPal Bank would operate as a regulated financial institution, marking a structural shift for a company best known for online checkout buttons and peer-to-peer transfers through Venmo.

PayPal’s move into banking is less a leap than a formalization of work it has been doing for more than a decade. Since 2013, the company has provided access to more than $30 billion in loans and working capital to over 420,000 business accounts worldwide. Those products have helped merchants fund inventory, expand operations, and invest in staff and tools, often filling gaps left by traditional lenders. A bank charter would enable PayPal to deliver lending services more efficiently in the U.S., reducing reliance on partner institutions and giving it greater control over funding and execution.

Competition across fintech has sharpened this strategy. As margins on payments narrow, platforms like PayPal have steadily added services that resemble core banking functions. Credit, savings, and account-based products deepen customer relationships and keep money circulating within a single ecosystem. A bank would give PayPal direct access to deposits and settlement infrastructure, reshaping how it moves money behind the scenes.

Small businesses remain central to the plan. PayPal already serves millions of merchants across e-commerce platforms and marketplaces. Folding lending and savings into that same environment could turn PayPal into a more complete financial hub for merchants who already rely on it to accept payments.

The market reacted cautiously but positively. PayPal shares rose about 1.5% in extended trading after the announcement, CNBC reported. The company reported a 7% year-over-year increase in revenue to $8.42 billion in its most recent quarter, beating expectations. The stock has fallen roughly 29% so far in 2025, while the broader market has continued to climb.

Regulatory approval remains a key hurdle. Banking status brings heavier oversight, capital requirements, and compliance obligations. For PayPal, those costs appear worth absorbing in exchange for durability and scale. If approved, customer deposits held at PayPal Bank would qualify for FDIC insurance, which could ease trust concerns for users weighing whether to hold balances in a fintech-owned bank.

PayPal has already begun staffing the effort. Mara McNeill has been selected to serve as president of PayPal Bank, bringing more than 25 years of experience across banking, commercial lending, and private equity. Before joining PayPal, she served as president and CEO of Toyota Financial Services.

The application does not guarantee approval or a fast launch. It does make one thing clear. PayPal is no longer content sitting alongside banks. It wants to be one.