Will PayPal become a bank? Implications for your savings and borrowing
TOI GLOBAL DESK | Dec 16, 2025, 19:51 IST
Paypal
( Image credit : AP )
Paypal is seeking a banking charter. This move aims to allow the company to offer savings accounts with interest and federally insured deposits. It will also boost their lending to small businesses. This positions Paypal as a full financial institution. The application is under regulatory review. Customers may see new financial tools soon.
PayPal is taking a major step toward becoming a full service financial institution, signaling a shift that could reshape how millions of Americans save and borrow.
The digital payments giant confirmed this week that it has applied for a banking charter, a move that would allow the company to offer interest bearing savings accounts and provide federally insured deposits through the Federal Deposit Insurance Corporation (FDIC).
If approved, the charter would also give PayPal greater flexibility to expand its lending business, particularly for small businesses that already rely on the platform for payments and cash flow.
The company said the application is part of a broader effort to deepen its financial services offerings as more consumers and entrepreneurs look beyond traditional banks.
“This step would allow us to better support small businesses with responsible access to capital,” PayPal said in a statement released Monday. The company did not provide a timeline for when a decision might be made.
PayPal’s move comes at a time when federal regulators have shown increased openness toward financial technology companies entering the banking system. Since President Donald Trump returned to office earlier this year, the administration has pushed for lighter financial regulations, creating new opportunities for digital finance firms to seek bank charters.
Industry analysts say becoming a bank would reduce PayPal’s reliance on partner institutions and lower long term costs, while also giving customers more reasons to keep money within the PayPal ecosystem.
“Having direct access to deposits changes the economics for a company like PayPal,” said a senior banking analyst who follows fintech policy developments. “It allows them to lend more efficiently and compete more directly with traditional banks.”
If regulators approve the application, PayPal users could eventually see new features such as insured savings accounts, expanded loan options and more integrated financial tools for managing money in one place.
However, experts caution that approval is not guaranteed. Banking charters require extensive regulatory review, including oversight of risk management, consumer protections and capital requirements.
For now, PayPal says it will continue operating under its existing licenses while the application process moves forward.
The development underscores a larger trend: fintech companies are no longer just payment platforms. They are increasingly positioning themselves as full scale financial institutions.
The digital payments giant confirmed this week that it has applied for a banking charter, a move that would allow the company to offer interest bearing savings accounts and provide federally insured deposits through the Federal Deposit Insurance Corporation (FDIC).
If approved, the charter would also give PayPal greater flexibility to expand its lending business, particularly for small businesses that already rely on the platform for payments and cash flow.
The company said the application is part of a broader effort to deepen its financial services offerings as more consumers and entrepreneurs look beyond traditional banks.
“This step would allow us to better support small businesses with responsible access to capital,” PayPal said in a statement released Monday. The company did not provide a timeline for when a decision might be made.
PayPal’s move comes at a time when federal regulators have shown increased openness toward financial technology companies entering the banking system. Since President Donald Trump returned to office earlier this year, the administration has pushed for lighter financial regulations, creating new opportunities for digital finance firms to seek bank charters.
Industry analysts say becoming a bank would reduce PayPal’s reliance on partner institutions and lower long term costs, while also giving customers more reasons to keep money within the PayPal ecosystem.
“Having direct access to deposits changes the economics for a company like PayPal,” said a senior banking analyst who follows fintech policy developments. “It allows them to lend more efficiently and compete more directly with traditional banks.”
If regulators approve the application, PayPal users could eventually see new features such as insured savings accounts, expanded loan options and more integrated financial tools for managing money in one place.
However, experts caution that approval is not guaranteed. Banking charters require extensive regulatory review, including oversight of risk management, consumer protections and capital requirements.
For now, PayPal says it will continue operating under its existing licenses while the application process moves forward.
The development underscores a larger trend: fintech companies are no longer just payment platforms. They are increasingly positioning themselves as full scale financial institutions.