PayPal Eyes ‘Major Opportunity’ Of Aussie SMB Lending
Payment company PayPal is looking at small business credit as a new field of opportunity.
The company is championing a national digital framework in Australia that would speed up the processes used to verify customers.
In a submission to a senate inquiry into financial and regulatory technology, PayPal and other fintech companies recognized alternative business finance as a key strategy moving forward, according to the Sydney Morning Herald on Friday (Feb. 21).
PayPal’s Australian chief executive Neil Matthews said consumer and small business credit would be major opportunities for PayPal. The company offers businesses working capital so they can borrow funds at a percentage of their income and pay them back in increments, as they make sales through the platform, minus a set fee that is determined by the company’s sales history.
The company has now loaned more than $500 million to 7,000 Australian companies, officials said. And ongoing demand for that service means PayPal will keep offering it, the company said. Around 25,000 loans have been written to Australian businesses.
PayPal said in its senate submission that there were information asymmetries in the Australian system that made it difficult for young people and smaller businesses to access credit. That’s because most information about their financial histories was held by larger institutions.
But open banking is on the rise and has been touted as a way to make it easier for fintechs and other alternative institutions to compete. Matthews said the creation of a secure, government-issued identity framework would make it easier to get people verified and authenticated, which would in turn spur growth in Australia.
Other fintech operations like MYOB and Xero have indicated they want to swim in similar small business credit waters alongside PayPal. Both companies have said they also see the potential in the market. The shift also comes after Telstra and others have indicated that they’ll stop allowing supply chain finance offers that let businesses get paid faster for a price.
Channel: UAZMI - World News