PayPal is looking to get into the stock trading business, in an effort to better align the payments giant with the ongoing boom in retail investing.
According to CNBC, which cited individuals familiar with the matter, PayPal is in the midst of exploring new ways to allow its US customers to trade individual stocks. The payments company has recently hired Rich Hagen as CEO of PayPal’s previously unknown division called “Invest at PayPal,” as per the brokerage industry veteran’s LinkedIn page. The page lists his job description as exploring opportunities in the consumer investment sector.
When CNBC requested comment on the new development, PayPal’s CEO Dan Schulman brought attention to the company’s February investor presentation, which highlighted future prospects that may include additional financial services, such as “investment capabilities.” PayPal’s latest interest in the stock trading business comes after the company began allowing its users to trade and make online payments with cryptocurrencies last year.
Retail trading has boomed in popularity since the beginning of the pandemic, as generous stimulus checks, coupled with stay-at-home orders, have sparked a new interest in the stock market among individual Americans. PayPal’s rival Square has recently opened a stock and crypto trading segment via its Square Cash App, while Robinhood, which made its public debut in July, has seen more than 22.5 million customers flock to its platform.
However, despite the optimistic prospects that the retail trading sector entails, PayPal’s ambitions likely won’t come to fruition anytime this year, explained the people familiar with the matter. In order for PayPal to be able to offer stock trading to its customers, it will either have to partner with, or purchase an existing broker-dealer. And, in the event that the company does gain approval to become a brokerage dealer, it will need to go through a membership procedure with the FINRA, the industry’s regulator.
Moreover, the retail trading boom has also begun to see its fair share of regulatory scrutiny as of recent. SEC Chair Gary Gensler has recently opened a new inquiry into the gamification of stock trading platforms, calling on the public’s opinion regarding behaviour prompts and nudges that encourage investors to make trades and take on elevated risk.
Information for this briefing was found via CNBC. The author has no securities or affiliations related to this organization. Not a recommendation to buy or sell. Always do additional research and consult a professional before purchasing a security. The author holds no licenses.