PayPal enters banking in Utah, achieving a major shift in financial strategy

PayPal, a major payment company, is accelerating its move into the financial services sector. It was revealed last month that the company applied for an industrial bank license in Utah, indicating that its business development has entered a new phase. This is not just an extension of its payment services but a strategic shift to function as a legitimate financial institution, including accepting deposits and providing loans.

Obtaining an industrial bank license in Utah to formalize lending operations

On Monday, PayPal applied for an industrial bank operating license in Utah and is planning to establish a new lending institution called “PayPal Bank.” This application is a significant signal that the company is moving away from its traditional payment platform business. If approved, PayPal will be able to accept deposits directly and engage in lending activities.

Two-tier plan for small business loans and personal savings accounts

Through the planned new PayPal Bank, the company intends to offer multiple financial services. For small and medium-sized enterprises, it plans to provide “business loan solutions” to meet their funding needs. Meanwhile, for general users, it aims to open interest-bearing savings accounts to expand investment options. Additionally, it is considering partnerships with credit card networks, aiming for a comprehensive financial service offering from payments to lending.

Applying for FDIC insurance to establish legitimacy as a financial institution

PayPal’s expansion into finance is not just about service expansion. The company has applied for deposit insurance from the Federal Deposit Insurance Corporation (FDIC), seeking to establish its status as a legitimate financial institution in the U.S. If FDIC insurance is granted, user deposits will be protected under the system, greatly enhancing trustworthiness.

Deepening cryptocurrency business and strategic integration with PayPal Bank

Although PayPal did not mention its cryptocurrency business during the license application announcement this month, recent developments clearly show its focus on digital assets. Earlier this year, it implemented cryptocurrency transfer functions between wallets and introduced a feature to generate personalized links for users to send and request cryptocurrencies. Additionally, it has integrated “Pay with Crypto” features into merchant services, creating a foundation for merchants to accept cryptocurrencies as a payment method.

The Paxos partnership for operating the PYUSD stablecoin is also central to PayPal’s cryptocurrency strategy. How these initiatives will be integrated with the planned new PayPal Bank will be a key focus moving forward.

New possibilities opened by obtaining a financial license in Utah

PayPal’s entry into banking operations in Utah is part of an international trend of digital payment companies aiming to become legitimate financial institutions. As the company evolves from traditional payment methods to a comprehensive provider of financial services, obtaining an industrial bank license in Utah is likely to be a significant milestone. The expansion of its cryptocurrency business and the establishment of a financial subsidiary are expected to create synergistic effects, enabling PayPal to build a diversified business portfolio spanning payments, DeFi, and traditional finance.