Is PayPal seeking to become a proper bank?

PayPal is expanding its offerings and increasingly looking to those who are referred to as “unbanked” by offering some interesting new services. Unbanked refers to people who don’t have a traditional bank account and that includes millions of people all around the world, not just in developed economies.

As Bill Ready of PayPal says of the unbanked: “If you don’t have a bank account, you can’t take an Uber ride, can’t stay in a room on Airbnb.” And the moves do suggest that it is increasingly looking at offering services that would be more regular provisions from a proper and licensed bank.

You can read more in a piece in the Wall Street Journal ($) but some of the developments reported are informative.

In the US, through partnerships with smaller banks in various states, PayPal now offers FDIC insurance on balances, a debit card that can be used to withdraw cash at ATMs and also the ability to direct-deposit paychecks simply by sharing a photograph. All of these services are of particular use to those who fall outside the pale of traditional banking.

Eighty-five percent of today’s transactions are still happening in cash and checks. One service we’ve had for some time lets consumers load cash into their PayPal balance at over 20,000 CVS, 7-Eleven and Rite Aid retail locations in the U.S. to do activities like shop or pay their bills online. Additionally, people can now deposit checks via a mobile device more affordably and conveniently.
– Bill Ready, PayPal COO

eBay’s bold announcement earlier this year that PayPal will no longer be its primary payments provider come 2020 has doubtless inspired the payments firm to reassess its position and role. And whilst eBay is a vital component of PayPal’s business it is by no means its only or most significant revenue stream. And as pundits note, the new services do point toward PayPal finally taking the plunge and taking on the mantle as a full bank in the US. Watch this space.