PayPal has been in operation for a relatively long period, and you might find numerous commercial transactions being carried over thousands of sites online with the “pay by PayPal” option on. To have a PayPal account, you must provide it with some personal credentials and particulars. In this regard the most common query posed by people from every hook and corner of the world pose is, “Why is PayPal asking for my SSN information?” or “Why does PayPal need my SSN?”
To find out answer for these and other similar questions, you need to be aware of how PayPal generally operates and what it does with the said details. This article will clearly let you understand, “Why does PayPal need your SSN?” So read further to get an answer.
About Paypal And How It Works?
PayPal is a digital financial service provider which allows users to pay for things using a secured account online. It facilitates to pay and pull out funds from bank accounts and credit/debit cards, although it does not perform offer conventional banking operations. In short, PayPal is just a money service company and not a fully functional bank.
For using the PayPal account, you are required to add certain details, including:
- Your bank account(s)
- Your debit or credit card details
- Your contact information
Note: As a matter of fact, you can add multiple accounts to PayPal. While one of your accounts be as the default account of payment purposes and set one or more as a back-up option.
Beside the above mentioned set of information at some point of time PayPal asks for user’s Social Security Number (SSN). The next section of the article will make you learn more about reasons of PayPal asking for SSN and validation of the same.
Does PayPal really require SSN?
As PayPal isn’t a banking institution thus it should not mandatorily requires the Social Security Number of the users. However the company has its own reasons for asking SSN. Let’s explore more about the reasons and rationale associated to it.
Why Does PayPal Ask for SSN Details?
Practically speaking, PayPal do ask for the users’ SSN since it wants to maintain records for sales or credit information. As per compliance norms, all the US payment processors including the likes of PayPal are required to provide information to The Internal Revenue Code (IRC) about their customers who receive payments via selling of goods or services using the particular application/platform.
As each of the customer/user registered with PayPal is either a buyer or a seller, one need not have to provide SSN for buying transactions. But if you sell and use PayPal for receiving payments, you must add an SSN or your EIN (federal tax ID number). In such cases PayPal requires SSN for its internal compliance, especially if the amount accumulates over $20,000 per year, AND the recorded selling transactions tolls over 200 annually (whichever happens first) it becomes a mandatory.
Other than the aforesaid motive, there are a few more reasons as to “Why do PayPal need user’s SSN”:
- First and foremost, it is needed to be used for tax reporting.
- Secondly with that on cards, PayPal can offer extra security to the user.
- In addition to above points PayPal requires the SSN to verify your identity. (Since SSN is unique in nature and can never be shared by two different individuals it helps PayPal to identify you as an individual.)
- Lastly if you wish to sign up for the PayPal credit, you have to supply with your entire SSN.
To Sum Up:
If you are a just one of a casual buyer on PayPal, you should pay no attention to any attempt from PayPal asking for SSN or EIN info. However, it is necessary for you to provide details of your SSN or tax number only while collecting online payments from PayPal customers or other commercial transactions.
That’s all from our side, hope you have understood all the reasons and rationale of PayPal asking for SSN as we have answered to your question, “Why does PayPal need my SSN?”