Difference Between Linking A Bank Account And Debit Card On PayPal

Difference Between Linking A Bank Account And Debit Card On PayPal

PayPal users are required to link a bank account and/or a debit card after registration. Many people are usually confused by this and think it would be sufficient to link only their bank account or debit card. In this article, I’ll be explaining the differences between linking your debit card and bank account on PayPal. 

Linking your bank account on PayPal is a way to verify your identity. Linking your card, regardless if it’s a credit or debit is an additional way of confirming your identity while also serving as a backup funding source. 

As you can see, there’s a reason why you are required to link your bank account and debit card. And I’ll be explaining those reasons in detail below. 

Should I link my debit card or bank account to PayPal?

Like I said in the answer paragraph above, linking a bank account is one of the ways by which PayPal verifies your identity. Paypal treats all cards as credit cards so it doesn’t matter if you have a credit or debit card. Linking your card, however, serves as an additional proof of ID as well as a backup funding source. You can have up to three funding sources on PayPal – your PayPal balance, bank account, and debit/credit card

You should know that financial institutions like banks, credit card issues, and 3rd party transaction processors like PayPal have to verify the identity of the person behind any and all Accounts into which money is collected. This is a requirement that arises from the USA Patriot Act, Title III, Anti-money laundering that aims to prevent terrorism by requiring institutions to take reasonable steps to know the identity of bank account owners as well as those who have been authorized to route or use funds through payable-through accounts.

You have to be able to verify your identity to the bank before you can open an account with them. PayPal knows this and takes advantage of it to save themselves the trouble of verifying your identity and that’s why you are required to link your bank account. This way, PayPal will be able to meet the legal requirements to protect itself.

PayPal’s FAQs state: To Verify your PayPal account, just link your bank account to your PayPal account or be approved for PayPal Smart Connect or the PayPal Plus MasterCard®. (Note, the PayPal Plus MasterCard was introduced in 2001.  In 2011 the name was changed to the PayPal Extras MasterCard.)

While you can still manage to use PayPal without linking and confirming a bank account, experience has taught me this is not convenient as there will be several limitations/restrictions on your account. So it’s better to just link your bank account. PayPal may at times require you to register your SSN and I’ll be writing an article about that soon. 

Linking and confirming your card acts as an additional proof of ID and a backup funding source as I said earlier. Note that you’ll also be able to do instant transfers with a linked debit card. 

Which one is better for you?

Since you have to link your bank account as a way to verify your identity on PayPal, you don’t have much of a choice about this if you want to enjoy the full features of PayPal. There are several advantages of linking your bank account to PayPal. For one, you don’t have to ever enter your financial details such as card details when you are making purchases or payments online. All you need is your Paypal account to securely and conveniently checkout. Your PayPal balance is usually your primary funding source by default but you can easily change this to your bank account or card. 

You are able to conveniently keep track of your spending when you link your bank account. After linking and confirming your bank account, it becomes your primary funding source or a backup funding source when your primary funding source is unavailable. Note that you can always change which payment method is your banking source or backup source. 

Once you link a bank account, paying with your bank is secure. Here’s why:

•    The recipient never sees your bank account information when you pay.

•    We send you a receipt every time a payment is made from your account so you can keep track of transactions.

•    We review all transactions and let you know if we notice unusual account activity.

•    Unauthorized payments are rare. But if an unauthorized payment is somehow sent from your PayPal account, you’re covered. We’ll reimburse you (typically within 10 business days after you notify us of the unauthorized payment) so you’ll have your money while we investigate the transaction.


PayPal allows you to link your MasterCard, Visa, American Express, or Discover to pay for merchandise online or send money to your friends and family. Note that PayPal requires the billing address on your card to be the same as the address on your PayPal account. While Paypal allows you to add more than one card to your account, you can only link one card to a PayPal account at a time. And PayPal says this is for security reasons. This means if your partner for example has linked your card to his/her PayPal account, then he/she has to remove it from their account for you to link and add the card to your account. 

I must also mention that PayPal only allows cards that have a card verification number (also known as a CSC code) and you need to provide the CSC code when adding a card to your PayPal account.

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