By Hallie Detrick
April 9, 2018

What has FDIC insurance on balances, a debit card that can be used to withdraw cash at ATMs, and the ability to direct-deposit paychecks, but isn’t actually a bank account?

It’s PayPal’s latest innovation, according to the Wall Street Journal. The company has reportedly been quietly rolling out traditional-bank features to certain groups of customers over the past few months.

The online payments company has good reason to keep this new offer mum: it doesn’t have a U.S. banking license. That means all these services are the result of a series of bilateral agreements between PayPal and small banks that remain anonymous. These agreements help PayPal avoid FDIC regulations on whose deposits it will insure and Visa and MasterCard rules about what kinds of institutions the credit card companies will run cards for. So maybe it’s not quite a bank account, but it sure walks and talks like one.

PayPal COO Bill Ready is pretty clear about who this “bank account” is and is not for: if you already have a bank account, it’s not for you. He told the Wall Street Journal that the new service was driven by the necessity of a bank account in order to participate in the modern economy. “If you don’t have a bank account, you can’t take an Uber ride, can’t stay in a room on Airbnb,” he said.

This focus on serving unbanked communities may also shed light on a deal announced today between PayPal and M-Pesa, a mobile money service based in Kenya. The deal will allow M-Pesa users to link their accounts to PayPal in order to buy goods and services outside of Kenya more easily.

But PayPal is far from the only non-traditional bank trying to enter the banking sector. Square and Amazon have both explored bank-like offerings. Last year TransferWise started offering banking services to select users that would allow them to convert currencies for free. Monzo, a digital pre-paid debit card company in the UK, recently converted all its users to full bank accounts.

With non-traditional entrants into the banking field multiplying and some traditional banks reducing their services, the PayPal bank account may be a sign of things to come.

A spokesperson for PayPal was not immediately available for comment.

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