Dive Brief:

• PayPal Holdings and the Department of Justice agreed Tuesday to the settlement of an inquiry by the federal agency related to the digital payments company’s 2020 program providing investments in Black and minority businesses.
• The civil settlement resolves the agency’s “fair lending investigation into a discriminatory investment program,” offered by PayPal, the DOJ said in a press release. A $500 million “economic opportunity fund” under PayPal’s program attracted DOJ scrutiny, perhaps due to President Donald Trump’s executive order last year aimed at eliminating what his administration calls illegal diversity, equity and inclusion programs.
• “This Department of Justice is delivering on President Trump’s vow to root out illegal DEI from every corner of corporate America,” Acting Attorney General Todd Blanche said in the release. “American corporations are on notice: you will face our aggressive enforcement if you use race or national origin to discriminate against qualified Americans.”

Dive Insight:

PayPal entered the settlement without admitting any culpability for the 2020 program, which provided some $530 million in benefits to minority businesses and communities. The company denied “any liability” related to the economic opportunity fund, the settlement said.

As part of the DOJ settlement, PayPal agreed to start a new initiative that will waive the company’s processing fees for $1 billion of transactions for small businesses in the manufacturing, technology and farming industries, or those certified under an existing federal program for military businesses. 

Under the setttlement, those benefits were valued at $30 million for the duration of the initiative, which appeared to be at least three years, based on annual reports the company is expected to make to the DOJ.

“For more than two decades, PayPal has helped small businesses start, scale, and thrive by expanding access to digital financial tools,” the company said in a Tuesday statement when asked to comment on the settlement. “We’re excited to launch the Small Business Initiative to infuse American small businesses with even more economic opportunity.” 

A spokesperson for PayPal said the company is seeking to hire a director for the new program, to be coordinated with the Small Business Administration.

PayPal’s former 2020 program, which offered grants and other financial assistance, was a bid to shore up the communities following the COVID-19 pandemic and racial turmoil that followed the murder of George Floyd in Minneapolis. “For far too long, Black people in America have faced deep-seated injustice and systemic economic inequality,” former PayPal CEO Dan Schulman said at the time.

The Tuesday agreement was signed by the assistant attorney general for the civil rights division of the DOJ, Harmeet Dhillon and PayPal CEO Enrique Lores. 

Lores became the chief executive of San Jose, California-based PayPal in March after the abrupt departure of Alex Chriss from that top post. 

The company on Tuesday also announced a program to support small businesses around the world with resources and training, underscoring a “commitment to supporting entrepreneurs also includes long-standing partnerships that expand financial inclusion around the world.”