Security concerns arise whenever money wallets like PayPal are mentioned in conversations amongst people for use as a trusted money wallet. Is the personal information collected safe? Is my money safe? These are a few out of a number of questions asked in these conversations. PayPal requires personal information such as the user’s full name, Social Security Number (SSN), identity proof documents, etc to ensure the user’s security and identity, hence, it’s logical to ask why PayPal needs your SSN.
PayPal needs your Social Security Number for sales and credit information. PayPal does this to conform with the IRC which states that all US payment processors such as PayPal, must provide information to the IRS about customers who receive payments from selling goods or services on the app.
Due to taxes and some other reasons, PayPal may require your SSN. In this article, I’ll explain why PayPal needs your SSN and if it’s safe.
Why Does PayPal Need The Last 4 Digits Of My SSN?
The major reason PayPal asks for your SSN is that PayPal requires the data for sales and credit information. Buyers aren’t really required to provide their SSNs; instead, PayPal verifies the identity of the buyers with its identity document verification process. Hence, you’re not legally obligated to provide your SSN to PayPal as a buyer.
On the other hand, if you’re a seller, PayPal requires this information to conform with the internal revenue code that states that all US payment processors, including PayPal, must provide information to the IRS about customers who receive payments from selling goods or services through the application.
If you sell on PayPal and you have made 200 selling transactions annually or you’ve made $20,000 per annum, you are required to submit your SSN information to PayPal. PayPal requires sellers that have met the above criteria to submit their SSNs because the IRS requires PayPal to send in details of sellers that have recorded 200 selling transactions or made $20,000 or more in sales of products or services provided. It’s also used to issue tax forms 1099-k to the sellers that meet this criterion.
Asides from the above reasons, there are some other reasons why PayPal needs the last 4-digits of your Social Security Number. One of these reasons is that it is used for tax reporting purposes. PayPal requires the number to send a comprehensive gross report of sellers who have made $20,000 in a year or 200 sales in a year, to the IRS.
The last 4-digits of your SSN are also required by PayPal to further secure your PayPal account appropriately. In this new age of emerging technology, there are account hacks by hackers with the aim of snatching your account and using it for frivolous activities hence, to provide better security for your account, PayPal requests for your SSN. Cyber security is the most important way to secure your online activities as buyers need to be safeguarded from malicious sellers and Vice versa hence, to achieve better security, PayPal may require your SSN.
The SSN is also used as a means of verifying your identity. It can be used as an identity verification document that helps you verify your identity on PayPal since the SSN is unique to you and no one else shares it with you. It allows you to be identified on PayPal as an individual that owns a personal account or a business account.
PayPal doesn’t usually request for SSN except you’ve hit the above criteria or you need to verify your identity with PayPal for better security.
Should I Give PayPal My SSN?
You should give PayPal your SSN because it allows PayPal to verify your identity and protect your account. Usually, PayPal won’t require you to use your SSN for identity verification as they mostly verify accounts through linked bank accounts, but whenever they do, it’s advisable to provide PayPal with the information needed as long as PayPal is regulated and you’re not asked to send the information through means of personal contact like through SMS or emails, to some personal email posed as PayPal (you need to be very careful of this).
While opening a PayPal account, you’ll be prompted to add your bank account, contact information, and a credit card or debit card details. This information is used by PayPal to verify your identity and build an authentic account as you’ve been verified by PayPal to help build a trusted PayPal ecosystem.
PayPal does not usually require you to be verified through your SSN except if you’re using a business account because you have a bank account already linked to your SSN and can also be linked to your PayPal account to verify you through there. PayPal takes advantage of the fact that your bank has already verified your identity hence you can be verified with your bank account.
Whenever you’re required to submit the last 4-digits of your SSN to PayPal, you have to submit it because there’s no way around it. Although if you use a business account and you have an employer identification number, you can submit your EIN instead of the SSN.
PayPal’s aim is to protect both buyers and sellers from fraudulent transactions as they understand not all of their users use the platform with good intentions, hence the reason for requesting very personal information for verification purposes. With the SSN linked to the PayPal account, fraudulent accounts can be easily tracked with the SSN and brought to justice. So, providing PayPal with your SSN does more good than harm for you.
Can PayPal Steal Your Ssn?
PayPal is well known for its efforts in keeping users’ data safe as the platform has never been hacked before and user data has never been leaked by PayPal hence you need not worry about PayPal stealing your SSN. PayPal’s cyber security team makes sure that your data can not be intercepted when sent from your device to PayPal and it also stores your information by encrypting it before storing it into the database.