Months after PayPal Holdings Inc (NASDAQ: PYPL) launched cryptocurrency trading, it is set for the next move that turns it into a prominent competitor for the likes of Robinhood.
The fintech firm wants to launch a stock-trading platform that will enable its users to buy, sell, and hold individual stocks, two sources familiar with the matter disclosed on Monday.
PayPal hires brokerage industry veteran
As part of the plan, PayPal hired Rich Hagen as the CEO of its new division – ‘Invest at PayPal’. Hagen is a brokerage industry veteran who co-founded and presided over the Florida-based foreign exchange company Ally Invest.
PayPal CEO Dan Schulman had already hinted on “investor day” in February that the company is interested in expanding its footprint in other financial services in the long run, including “investment capabilities”.
PayPal shares jumped more than 3.0% on the news, while Robinhood fell over 4.0% in the stock market today.
PayPal could partner with a broker-dealer
PayPal could partner with a broker-dealer or acquire one to launch a stock trading platform for its users. The payments giant has already reached out to potential industry partners, one source confirmed to CNBC’s Kate Rooney. The new service, however, is not expected to roll out in 2021.
The news comes on the heels of a sharp increase in retail trading this year. According to JMP Securities, the market saw an influx of over 10 million new individual investors in the first six months of 2021.
With the trading boom, however, comes greater regulatory scrutiny. To establish itself as a brokerage firm, PayPal will have to undergo a new membership process through FINRA, which
