FOUNDED IN 1998, PayPal originally began life as a security software company before becoming the electronic payment provider we all know and love the following year. Since then, the eWallet provider has evolved to offer an exhaustive range of digital payment services for the individual consumer and businesses alike. Alongside secure online payments and money transfers, PayPal provides users with a convenient online invoicing solution, facilitates crypto asset trading, and today offers a suite of credit products, such as buy now, pay later.
Despite the likes of Neteller and Skrill hitting the eWallet scene in recent years, PayPal has managed to maintain market dominance. Since 2013, PayPal has been offering credit products and loans to small businesses, but it’s yet to formalise itself as a legitimate lender and contender to conventional banks. However, with the recent announcement of an application for PayPal Bank, that looks set to change.
Originally, PayPal was intended solely as a way to manage online payments. Adjacent to the boom in eCommerce, PayPal emerged as a frontrunner for those looking for an alternative means of payment to online credit and debit card transactions. However, the inherent security of the service, expedited payments, and the option to manage transactions in multiple currencies also made PayPal the go-to choice for those looking to manage online payments for other uses.
That same logic helped PayPal move into adjacent verticals where transaction speed and account security matter. One of the clearest examples is online gaming, where users increasingly choose payment methods based on withdrawal times and day-to-day control rather than on deposit convenience alone. On platforms such as Spin Casino, players can typically access several rails (cards, bank transfer, crypto, and eWallets) yet many still prefer eWallets because they keep gaming spend separate from primary current accounts and can simplify cash-out flows.
PayPal has already been offering credit products to small businesses for more than a decade now, with the likes of PayPal Working Capital. However, in a recent application, PayPal looks set to solidify its presence as a more conventional lending institution by establishing PayPal Bank. If the application is accepted, PayPal Bank would be able to offer credit loans to small businesses more efficiently, while at the same time being able to operate autonomously of third-party banking partners.
Prospects for PayPal Bank look promising, with the company already holding a banking licence in Luxembourg. As well as offering direct lines of credit to businesses, individual customers look set to benefit, with PayPal Bank also set to offer savings accounts that would rival interest-bearing equivalents with established banks and financial institutions.
Initially slated as a US-only endeavour, PayPal Bank will strengthen the company’s authority as a credit lender, allowing the company to nurture small business growth at home before rolling out its offering to international customers abroad. In a reassuring move, Mara McNeill has been named as president of PayPal Bank, bringing decades of experience in similar roles with the likes of Toyota, JP Morgan Chase, and the US Treasury Department.
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