PayPal submitted applications to the FDIC and Utah Department of Financial Institutions in December 2025 to form "PayPal Bank" as an industrial loan company (ILC). The charter would enable FDIC-insured deposits, direct card network membership, and expanded lending capabilities.
Strategic Rationale
PayPal has already extended over $30 billion in small business loans through its Working Capital and Business Loan products, but currently relies on partner banks for lending licenses in most states. A banking charter would allow PayPal to lend directly, hold deposits, and eliminate the revenue share paid to partner banks. Direct card network membership would also remove BIN sponsor dependencies.
Fintech Charter Wave
PayPal's application is part of an rare wave of fintech banking charter applications. The OCC received 14 de novo charter applications in 2025 alone - nearly matching the prior four years combined. Revolut, Stripe, Nubank, Circle, and Affirm all have pending bank or ILC applications, signalling a structural shift from partnership-based to direct-access business models.
What This Means
The world's largest digital wallet company seeking a banking charter represents a fundamental convergence of payments and banking. If approved, PayPal Bank would be the largest fintech-controlled banking entity in the US by customer reach (over 400 million accounts). The broader wave of fintech charter applications suggests the industry has concluded that direct payment rail access - Fedwire, ACH, card networks - is now the competitive frontier.