PayPal has taken a significant step toward reshaping its US business model after applying to establish PayPal Bank, a regulated banking institution aimed at expanding its financial services offering. The move signals a strategic shift that would bring the global payments company closer to the operational scope of traditional banks.
The application has been submitted to US regulatory authorities, including the Federal Deposit Insurance Corporation and the Utah Department of Financial Institutions. PayPal Bank is expected to operate as an industrial bank, a structure that allows non-banking companies to provide regulated services such as deposit taking and lending. Approval is subject to extensive regulatory review, covering capital adequacy, governance standards, and compliance frameworks.
A central objective of the initiative is to strengthen support for small and medium-sized enterprises. PayPal CEO Alex Chriss has highlighted SMEs as a core focus, noting that many continue to face challenges accessing credit through conventional banking channels. A banking licence would allow PayPal to offer more integrated financial products while reducing reliance on partner banks.
PayPal is also considering launching interest-bearing savings accounts under the new structure. While similar services already exist through third-party banking partners, direct deposit management would enable tighter integration across payments, savings, and lending, supported by federal deposit insurance protections.
The proposed bank would place PayPal in more direct competition with established US financial institutions, particularly in digital-first and SME-focused services. The move builds on PayPal’s European experience, where it operates under a Luxembourg banking licence. If approved, PayPal Bank could mark a defining moment in the convergence of fintech and traditional banking in the US.
