PayPal has revealed it is looking at small business credit as an opportunity to expand its offering.
According to the Sydney Morning Herald, the company will be using a digital network framework based in Australia, in an attempt to speed up customers verification process.
PayPal’s Australian chief executive Neil Matthews, told the paper: “Consumer and small business credit is a major opportunity for Paypal.
“Creating a secure, government-issued identity framework linked to an electronic know-your-customer could greatly improve the system for onboarding, authentication and verification for electronic payments.”
It is reported that PayPal and other fintech companies are identifying financial and regulatory technology as key strategies into how to further develop the payments sector. With MYOB and Xero also interested in recognising alternative methods.
As a result of the payment companies shift in strategy, PayPal has now loaned more than $500 million to 7,000 Australian companies, while around 25,000 loans are written to Australian firm’s.
In the companies senate submission, PayPal stated that information asymmetries in the Australian system made it difficult for young people and smaller businesses to access credit. Due to most information about their financial histories being held by larger institutions.
The news also follows Telstra’s statement that the Australian telecommunications company will stop allowing supply chain finance offers that let businesses get paid faster for a price.
Expert Analysis: PayPal hopes that by investing in the Australian market they will ease the transition between customers and business, creating a better financial structure which will hopefully in turn be beneficial to the company.