The companies declined to disclose the amount of the investment, but Tala issued a statement that it will use the funding to further develop its product and broaden its reach.
Tala, which is based in Santa Monica, California lends to individuals in Kenya, Tanzania, the Philippines, and Mexico through its smartphone app. The company has lent more than $500mn to customers and has more than 300 employees around the world.
It is among a growing cohort of new entrants in finance that take advantage of digital technologies to service individuals that have been excluded by the traditional banking sector because they were considered too risky or too unprofitable.
The companies stated that more than two-thirds of adults across the world lack a formal credit bureau record, making it challenging for traditional financial firms to lend to them.
To service these consumers, Tala analyzes device and behavioral data to underwrite them and disburse loans of between US$10 and US$500 on mobile wallets or other methods. More than 85% of customers receive a loan in less than 10 minutes.
PayPal and Tala said they shared a commitment to serving this consumer segment.
Tala CEO and founder Shivani Siroya, stated in an interview: “We see we are all very mission aligned, both Tala and PayPal.”
“It’s been clear through the due diligence process that we share the commitment to building the financial health of the underserved.” She added.
Its suite of products included remittances business Xoom, which it acquired in 2015.
“Tala shares our vision of reimagining financial services, especially for the unbanked and those underserved by the traditional financial system,” Mark Britto, senior vice president and general manager of global credit, at PayPal said in a statement.