PayPal explores stock trading platform to take on Robinhood and Square

abdelaziz Fathi

Payment giant PayPal is reportedly looking into the launch of a stock-trading platform for US customers after it has hired a brokerage industry veteran to head its “Invest at PayPal” division.

paypal

According to a CNBC report, the California-based company recently onboarded Richard Hagan, former president of Ally Investment. Hagan’s LinkedIn page lists him as the CEO of PayPal’s unreported business that could take on Robinhood and other high-flying trading apps.

His job description on the professional network outlines that he is leading Invest at PayPal’s efforts to “explore opportunities in the consumer investment business.”

Hagen kicked off his new role at PayPal this month. Prior to that, he was leading Ally Invest, a digital financial services company. He also co-founded online brokerage TradeKing, which was acquired in 2019 by Ally Financial Inc. (ALLY) for $275 million.

It is unlikely, however, that PayPal’s foray into stock trading would be rolled out this year, sources told CNBC.

The expansion into the hot retail brokerage industry comes hot on the heels of PayPal’s move earlier this year to allow its 400 million users to buy and sell cryptocurrencies.

The payment giant apparently sees value in combining trading and crypto transactions with payments as the integration allows customers of its two-sided network, which includes both PayPal and Venmo, to keep or invest their money within the same ecosystem.

“If somebody is going to be putting their money onto our platform, we want them to be able to grow that money, to invest that money in not just things like crypto, but in individual stocks and other assets that we can digitize and allow people to invest in,” CEO Dan Schulman said in February.

PayPal’s interest in stock trading business comes after the COVID-19 pandemic helped draw in a different cohort of investors, many of them young and new to investing. The US brokerage industry is estimated to have added more than 20 million new accounts in the last two years, with Robinhood alone likely commanding nearly 50% of that figure.

Recent industry surveys also show that Main Street investors have ploughed a large chunk of Joe Biden’s coronavirus relief package directly into equities. Additionally, the fresh liquidity provided a boost for penny stocks embraced by individual investors active in online social media forums, such as Reddit’s WallStreetBets.

But while retail trading has ballooned in the past few months, US regulators are looking into recent dramatic price run-ups in heavily shorted stocks, as well as the activities of brokers.

Robinhood, mostly used by millennials to trade stocks and cryptocurrency, is particularly accused of employing aggressive marketing tactics to draw inexperienced traders, including the use of “gamification methods to control clients.”

Furthermore, PayPal is competing with its rivals, such as Revolut and Square’s Cash app on more fronts. Square Inc., a payments company founded and run by Twitter CEO Jack Dorsey, launched its free-stock trading service in 2019 and was awarded last year with a coveted license to deal in cryptocurrencies in New York.

Read this next

Retail FX

Financial Commission adds FX broker Bold Prime to membership roster

The Financial Commission today announced that it has added Bold Prime to its member roster, which is made up of online brokerages operating in FX, derivatives and cryptocurrency markets.

Digital Assets

Despite crypto winter, Cake DeFi paid out $58 million in Q2 rewards

According to its latest ‘Transparency Report,’ Cake DeFi continued its growth trajectory in the three months through June 2022, even as the entire crypto industry experienced macro challenges this quarter.

Retail FX

SimpleFX Review: Cryptos, Spreads, Pros & Cons

SimpleFX combines years of Forex and cryptocurrency experience with a focus on offering resources to retail traders. 

Retail FX

Ironbeam becomes CME clearing member and launches MT5

“The direct clearing aspect along with our low-latency proprietary trading tools and technology solutions make Ironbeam the ideal trading destination.”

Institutional FX

Top 0.07%: oneZero makes it to Inc. 5000 of fastest growing companies in America

oneZero started out by serving the foreign exchange trading community, developing and executing technology that could scale with the growth of the FX market.

Industry News

CFTC wins case against broker for secretly taking other side of client orders in block trades

“As we said at the outset of this case, the illegal use of inside or confidential information undermines confidence in markets and will not be tolerated.”

Technology

BankiFi raises $4.8m to bring embedded banking platform to North America

“Our mission is to make all aspects of cash management and payments easier for SMBs everywhere, and this investment is another huge step to making that a reality.”

Executive Moves

Shieldpay hires ex-Payoneer Chris Andrews as Head of Sales

“We’ll be expanding our position in existing markets and accelerating growth into new verticals, whilst building on our direct and indirect channels.”

Digital Assets

Crypto.com secures preliminary approval to operate in Canada

Crypto.com, one of the longest-established crypto platforms, has become the first digital asset platform to sign a Pre-‘Registration Undertaking’ with the Ontario Securities Commission (OSC) in Canada.

<