PayPal has been in operation for a relatively long time, and you can find thousands of commercial transactions being carried out online with the “pay by PayPal” option enabled. To open a PayPal account, you must provide some personal information and credentials. In this regard, the most common question posed by people from all over the world is, “Why is PayPal requesting my SSN information?” or “Why does PayPal require my SSN?”
To find answers to these and other similar questions, you must first understand how PayPal works and what it does with the information provided. This article will explain why PayPal requires your Social Security number. So continue reading to find out.
About Paypal And How It Works?
PayPal is a digital financial service provider that enables users to pay for items online using a secure account. It allows you to pay and withdraw money from bank accounts and credit/debit cards, but it does not provide traditional banking services. In short, PayPal is a money transfer service, not a fully functional bank..
You must enter certain information in order to use your PayPal account, including:
- Your checking account (s)
- Your debit or credit card information
- Your contact details
Note: In fact, you can add multiple accounts to PayPal. While one of your accounts is set as the default account for payment purposes, another one or more are designated as backup options.
Aside from the previously mentioned information, PayPal may at times request the user’s Social Security Number (SSN). The following section of the article will teach you more about why PayPal requests your SSN and how to validate it.
Does PayPal really require SSN?
Because PayPal is not a banking institution, it should not require users’ Social Security numbers. The company, on the other hand, has its own reasons for requesting SSN. Let us delve deeper into the reasons and logic behind it.
Why Does PayPal Ask for SSN Details?
In practise, PayPal does request the users’ SSN in order to keep track of sales or credit information. According to compliance standards, all US payment processors, including PayPal, are required to provide information to The Internal Revenue Code (IRC) about their customers who receive payments through the sale of goods or services using the specific application/platform.
Because every customer/user registered with PayPal is either a buyer or a seller, no SSN is required for purchasing transactions. However, if you sell and accept payments through PayPal, you must include your SSN or EIN (federal tax ID number). In such cases, PayPal requires SSN for internal compliance, particularly if the amount accumulates over $20,000 per year AND the recorded selling transactions exceed 200 annually (whichever occurs first).
Aside from the aforementioned reason, there are a few more reasons why PayPal requires the user’s SSN:
- First and foremost, it is required for tax reporting.
- Second, with that on cards, PayPal can provide the user with additional security.
- In addition to the points mentioned above, PayPal requires your SSN to verify your identity. (Because SSNs are unique and can never be shared by two different people, they help PayPal identify you as an individual.)
- Finally, if you want to sign up for PayPal credit, you must provide your complete SSN.
To Sum Up:
If you are a casual buyer on PayPal, you should disregard any request from PayPal for SSN or EIN information. However, you must provide your SSN or tax number only when collecting online payments from PayPal customers or other commercial transactions.
That’s all from us; we hope you understand the reasoning behind PayPal’s request for your SSN.