What Bank Does PayPal Use To Hold Your Balance?
Written by
Andrea Norris
Edited by
Rikki Elliot
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PayPal is known best as a simple way to send and receive money and make online purchases. But it also provides some of the same features as many online checking accounts and even offers a savings account. So is PayPal now a bank? If not, what bank is PayPal partnered with? Here are some things to know about PayPal and its money management features if you have a PayPal account.
Is PayPal a Bank or Wallet?
PayPal is not a bank, and its digital wallet features go beyond just storing your linked credit and debit card and bank account information for sending money and making purchases. PayPal is a digital payment service that also provides limited banking services, such as a savings account, a debit card and direct deposit enrollment.
What Bank Is PayPal Partnered With?
PayPal partners with the following banks, referred to as program banks on its website, to hold the PayPal balances of customers with select PayPal products:
- Wells Fargo
- Goldman Sachs Bank USA
- The Bancorp Bank
- Synchrony Bank
How Does PayPal Work With Program Banks?
Your PayPal balance isn’t FDIC-insured since PayPal isn’t an actual bank. However, by enrolling in specific PayPal products, your PayPal account balance is held and FDIC-insured up to applicable limits by one of the PayPal program banks.
PayPal puts your PayPal balance in a program bank that provides FDIC pass-through insurance if you have any of the following:
- A PayPal Debit Mastercard
- Any enrolled direct deposits
- Cryptocurrency received or bought via PayPal
PayPal savings account deposits are FDIC-insured and held by Synchrony Bank.
If a program bank holds your PayPal balance, any time you add funds to or receive money in your PayPal account, that money is automatically moved to the program bank by PayPal. You don’t have to take any additional steps to ensure the security of your money.
It is important to know if your PayPal balance is or isn’t FDIC-insured if you keep a balance in your PayPal account. For instance, if you use your PayPal account to accept payment for freelance services, those funds aren’t FDIC-insured if you don’t have a PayPal debit card, haven’t enrolled in direct deposit and have never bought or received cryptocurrency via PayPal. Additionally, if you have funds in a PayPal business account or hold other cryptocurrencies or non-U.S. dollar currencies in your personal PayPal account, your funds are not protected should PayPal fail.
How Can You Set Up Direct Deposit With PayPal?
PayPal allows you to set up direct deposit online or through the PayPal app, and you may be eligible to receive your direct deposit funds up to two days early.
To enroll in PayPal direct deposit:
- Log in to the PayPal app or website.
- Under your profile, select the “Set up Direct Deposit” option.
- Click or tap “Set up Direct Deposit.”
- Select “Set Up Automatically.”
- Search for the payer. If you can’t find your payer, provide the displayed direct deposit numbers — your account and routing numbers — to your payer.
- Follow the prompts to complete the direct deposit setup.
What Is the Routing Number for PayPal?
Because PayPal partners with more than one bank, there isn’t one PayPal routing number. When setting up direct deposit, providing the correct routing number is essential to ensure your money makes it into your account.
If you have never enrolled in direct deposit with PayPal, use the first five steps listed above to find your routing number.
If you have PayPal direct deposit set up, you can locate your routing number for your PayPal account as follows:
- Log in to the PayPal app or website.
- Under your profile, select “Direct Deposit” to view your routing number.
To locate the routing number for a PayPal Prepaid Mastercard linked to your PayPal account:
- Log in to the PayPal app or website.
- From the main menu, select “Add/Manage Money.”
- Select “Direct Deposit” to view your routing number.
Final Take
So is PayPal an actual bank account? No, a PayPal account is not a bank account, but PayPal does partner with a few different banks to provide select banking products and FDIC protection to customers who get these products.
With PayPal’s many features, you can use your account much the same way as you can a checking account. However, if you decide to use PayPal like a bank account, get a PayPal debit card or set up direct deposit to ensure your PayPal account balance is FDIC-insured by one of PayPal’s program banks.
Editorial Note: This content is not provided by any entity covered in this article. Any opinions, analyses, reviews, ratings or recommendations expressed in this article are those of the author alone and have not been reviewed, approved or otherwise endorsed by any entity named in this article.
