PayPal Moves Toward a Utah-Chartered Bank to Expand Lending, Deposits, and Financial Control

A strategic bid to internalize banking infrastructure and deepen small-business finance in the U.S.

TL;DR

• PayPal filed applications in mid-December 2025 to establish a Utah-chartered industrial bank, aiming to bring deposits and lending onto its own balance sheet.
• The proposed “PayPal Bank” would enable FDIC-insured deposits, direct loan funding, and expanded savings and credit products.
• The move reflects a broader fintech shift toward bank charters as regulatory conditions ease and competition with traditional banks intensifies.

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PayPal has taken a decisive step toward becoming more than a payments intermediary. During December 15–16, 2025, the company confirmed it submitted applications to the Utah Department of Financial Institutions and the Federal Deposit Insurance Corporation to establish a Utah-chartered industrial loan company under the name “PayPal Bank.” The filing marks a significant structural shift for one of the world’s largest digital payments firms, signaling a push to internalize core banking functions that have historically relied on third-party partners. Rather than expanding through incremental product launches, PayPal is seeking regulatory permission to directly control deposits, lending, and capital flows within the United States.

The bank charter would allow PayPal to hold customer deposits that are eligible for FDIC insurance, a material change from its current operating model. Today, PayPal depends on partner banks to custody funds and fund loans, a structure that adds cost, operational friction, and balance-sheet constraints. Executives have framed the charter pursuit as a way to streamline funding, reduce dependency on external institutions, and improve efficiency across its lending and payments stack. Owning a charter would also provide more direct access to payment networks and settlement infrastructure, tightening PayPal’s grip on the rails that underpin its consumer and merchant services.

Lending sits at the center of this strategy. Since 2013, PayPal has originated or facilitated more than $30 billion in loans and working capital advances to over 420,000 small and medium-sized businesses globally. Those programs, including PayPal Working Capital and PayPal Business Loans, are already deeply integrated into merchant cash-flow data and transaction histories. A chartered bank would allow PayPal to fund those loans directly using deposits it holds, rather than relying on partner balance sheets. Internally, the logic is straightforward: tighter control over funding can translate into faster credit decisions, more flexible risk management, and potentially lower borrowing costs for small businesses that already transact heavily on the platform.

Product expansion is another clear driver. A licensed industrial bank would enable PayPal to offer interest-bearing savings accounts and other deposit products that are difficult to support fully under a non-bank framework. It would also position the company closer to traditional banks in terms of functionality, while preserving its fintech distribution and user experience. Leadership decisions reinforce that long-term intent. PayPal has indicated that Mara McNeill, a veteran commercial lending executive and former chief executive of Toyota Financial Savings Bank, is expected to lead PayPal Bank, underscoring that the initiative is being treated as a standalone financial institution rather than an experimental add-on.

Regulatory timing appears deliberate. The application comes as U.S. regulators have shown greater openness to non-traditional bank charters, including industrial loan companies and trust banks, particularly under the current political and regulatory climate. Other fintech and crypto-adjacent firms have recently pursued or received approvals for specialized banking licenses, reshaping expectations around who can operate insured deposit institutions. PayPal’s move fits squarely within that trend, reflecting a broader industry view that scale, resilience, and competitiveness increasingly require direct regulatory footing rather than indirect partnerships.

For small businesses, PayPal has positioned the charter as a way to expand access to capital at a time when traditional credit channels remain uneven. By combining transaction data, payments infrastructure, and a regulated banking entity, the company argues it can better serve merchants that struggle with slow approvals or limited credit options. Approval timelines remain uncertain, as the process will involve state and federal reviews as well as public comment. Still, the filing alone marks a turning point: PayPal is no longer content to rent banking infrastructure. It is making a clear bid to own it, signaling a deeper convergence between fintech platforms and the U.S. banking system.

This article has been refined and enhanced by ChatGPT.