PayPal Ends Bank Backup Funding For Business Debit Mastercard
Sellers beware, PayPal is ending a major perk of the PayPal Business Debit Mastercard.
Many small business users have enjoyed the ease and simplicity of having a PayPal Business Debit Mastercard with a checking account as a backup payment method because it allowed them to earn cashback rewards without worrying about keeping a balance in PayPal - if there wasn't enough to cover the transaction, the remainder would simply be deducted from their bank account on file.
However, as of September 12, the option to connect a backup bank account will no longer be available and users must either manually transfer money to be stored in their account balance or transactions on the PayPal Business Debit Mastercard will be declined if the PayPal balance is not enough.
The policy change was issued on August 9 but is buried amongst other changes and legalese (emphasis mine):
Amendments to PayPal Business Debit Mastercard® Cardholder Agreement
Effective September 12, 2023:
Please review the updates below, which take effect on the date noted above. You can also review the updated Cardholder Agreement for additional detail.
- The Backup Funding Source linked bank account feature of the PayPal Business Debit Mastercard will no longer be available.
- “Debit Card” and “Activation” sections – updates clarifying certain provisions.
- “Using your Debit Card” section – updates to clarify the use of your Card to authorize transactions.
- “Additions to PayPal Business Balance” section – Adding a reference to the ability to use your Card to add funds to PayPal Balance at participating stores, including associated fees.
- “PayPal Business Debit Mastercard Fees” section – Clarifying certain other fees.
- “Amendment and Cancellation” section – Clarifying the manner in which notices may be provided.
Users discussing the change in the PayPal forums are worried about how it may impact their businesses and some say once this goes into effect, it will render their PayPal account useless.
PayPal Business Debit Card is removing backup bank account funding
I am not sure I am posting this in the correct location but we just received an email from PayPal informing us that starting September 12th the backup funding from our bank account to our PayPal Business Debit Card function is going to be removed from ALL PayPal accounts. I called and spoke with a w…
I am not sure I am posting this in the correct location but we just received an email from PayPal informing us that starting September 12th the backup funding from our bank account to our PayPal Business Debit Card function is going to be removed from ALL PayPal accounts. I called and spoke with a wonderful customer service rep Lori who spoke with her supervisor (and they had to speak with their supervisor). Apparently no one had informed them of this major change in PayPal business account functions.
We really rely on this benefit as we are fully self-employed with three businesses and live in a very rural area. The Debit Card backup funding gives us the peace of mind to know our accounts are running smoothly and we don't have to constantly check balances. Ours is a perishable product business and our sales are cyclical on a weekly basis, we don't have customers making purchases every day of the week.
Bottom line: booooooo to PayPal!! You just made our businesses HARDER to run on a day-to-day basis despite your claim in that very email stating your "ongoing focus on helping your business to thrive". I imagine there will be a lot of folks shopping around for other options since PayPal thinks it is fine to cut major functional benefits to their customers with no information or basis in doing so.
I got that email too, as I'm sure we all did. Barely a month's notice no less. And so end my many years long relationship with PayPal. This makes my life just a little harder, but at least I was wise enough to have signed up with other payment options.
I got the email too. No more using bank back up? So, if we have $50 in our paypal account and want to buy something that costs $60 we can't use our paypal debit card account??? OMG, are they kidding? That being the case, after decades of using paypal I will now immediately stop using it, dump it, and sign up for a debit card from a company that does offer/allow bank back up.
This impacts my business as well. I use my PayPal debit card to get the cash-back feature. Since my bank has a debit card, I'm going to move all my vendors, etc. to that card. Goodbye, PayPal.
So, if I cannot rely on a backup account, I just need to move all my subscriptions to my debit account and close this. The cash back feature was useful, and I liked being able to pay online without exposure of my credit card account information. So is THAT going away too??? I have credit cards backing up my transactions too.
Sellers in the eBay community also discussed the change - while eBay no longer uses PayPal to process payments to sellers, many still have PayPal accounts and relied on this backup funding feature to allow them to earn cashback on purchases made with the PayPal Business Debit Mastercard.
confused by PayPal news
Got an email from them which I confirmed with CS, that as of 9/12 they will no longer link to a bank account. I will no longer use my PayPal card due to this. I have no patience with having to constantly load money onto the PayPal site. I am confused however about accepting payment through PayPal -…
PayPal has faced pressure to increase revenue and cut costs resulting in the last year, resulting in multiple rounds of layoffs at the company as well as fee increases and ending other customer loyalty benefit programs like Return Shipping On Us.
PayPal Layoffs Continue As Pressure To Cut Costs Mounts
PayPal slashes jobs at headquarters in San Jose as well as risk management & ops across the US & Ireland.
Liz Morton ~ Founder
CEO Dan Schulman announced in February he would be stepping down at the end of this year and Intuit Exec Alex Chriss has been named as his successor.
Activist investor Elliott Investment Management, a major source of cost cutting pressure on the company, has also recently dissolved their significant stake in PayPal.
PayPal’s stock pulls back as Elliott reveals it dumped its stake last quarter
Elliott Investment Management dumped its stake in PayPal Holdings Inc. during the second quarter, a recent filing indicates.
Emily Bary
Will PayPal removing the bank account backup funding for PayPal Business Debit Mastercard impact your business? Let us know in the comments below!
48 comments
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Ess3
I think it's hilarious this change was done to cut costs and save money. I cant help but wonder how much PayPal will be saving by losing so many customers. This was one of their best features, even for those not relying on it for business. I don't have the most consistent income, so loved the feature for it's delay in processing my purchase to my bank. PayPal was my preferred payment, and I loved that the card made for the perfect emergency option. Even if I didn't have a certain amount in my bank account, I could use the PayPal Business Debit card to buy a necessary item on the fly, and give myself a day to get funds into my bank account to cover the purchase. I used to brag to people about how great PayPal is, but now I'll be warning them away (good luck saving money with fewer customers, PayPal). The irony here is that customers likely would have been willing to give up the 1% cash back, in order to keep the back-up payment option. I know I would have, since I often forget to choose to sign for stuff anyway (or that isn’t an option), and THAT would have actually saved the company money. Whoever is in charge seriously needs to re-think their cost-cutting options, and work towards reversing this decision, because it isn't benefitting the bottom line as much as it is losing them both current, and future, customers.
Ticked Off
Anyone up for a class action lawsuit due to the money, time, business lost as well as all the friggin business chaos caused by this?
trazom
PayPal will not be going out of business anytime soon.
Facebook Marketplace processes payments through PayPal.
That alone will keep PayPal in business for the indefinite future.
Facebook Marketplace processes payments through PayPal.
That alone will keep PayPal in business for the indefinite future.
trazom
I severed my ties to PayPal last year when Chinese hackers broke into the Paypal's servers and left a message (a link to a non-existent URL) on user accounts that Paypal itself was unable to remove. That break in by the Chinese led Paypal management to remove the user option to change their password from within Paypal.
I no longer sell on Amazon for the same reason; the Chinese have compromised certain Amazon software and there is nothing that Amazon can do to remedy it. The Chinese can now hijack any American sellers' listing and there is NOTHING Amazon can do to prevent it.
I hope that eBay is not similarly vulnerable.
I no longer sell on Amazon for the same reason; the Chinese have compromised certain Amazon software and there is nothing that Amazon can do to remedy it. The Chinese can now hijack any American sellers' listing and there is NOTHING Amazon can do to prevent it.
I hope that eBay is not similarly vulnerable.
Midi510
And they think they're going to make more money by losing customers and all those card fees? I just wish I'd have gotten the email. I did get a policy change email that was full of fine print, but they should have sent out a dedicated email explaining this.
Justinnn
CashApp uses automatic backup funding. Also, they use a physical CashApp Visa card that you can use to make purchases in real life anywhere Visa is accepted.
I'm hoping other people will stop filling up the comment section with complaints and be pro-active and start listing off alternatives that use automatic backup funding.
I'm hoping other people will stop filling up the comment section with complaints and be pro-active and start listing off alternatives that use automatic backup funding.
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lwashere
It appears the debit card can only use the balance according to other posts.
Does anybody know if this can change; otherwise cashapp is no different than PayPal debit card. Privacy.com is the only partial solution I can find.
Does anybody know if this can change; otherwise cashapp is no different than PayPal debit card. Privacy.com is the only partial solution I can find.
triad4evr
I really have no need for my PayPal card anymore either. I liked it as an extra layer of security over using my bank's debit card but there's no benefit now as I never keep a cash balance in PayPal. My card is basically useless now.
moorefarms
Yes this is just making a huge mess for us. Honestly, I would have PAID 1% to keep the function and readily given up the 1% cash back on purchases! It's just a short-sighted knee jerk reaction from someone on high who obviously has no regard for their customer's businesses. All four of our electric bill payments were declined when I didn't change the payment source in time, fortunately I caught it before I had a bunch of late fees. We have three businesses processing eCommerce with PayPal and will be moving all to another platform and DROPPING PayPal as a payment option at checkout. All of this could have been avoided if they consulted with a group of their customers to fly the idea and MAYBE make a different better decision for everyone. If there are people abusing the benefit then penalize THEM by taking the benefit away. Don't chop off the head, makes it hard to eat.
Karan Winter
I am also livid I had no idea this was happening as I admit I rarely read the emails they send out and this was buried in the fine print. Had to find this out after having some things declined( thankfully I had backup methods to pay) Spent a long time trying to get a hold of them only to find this out. I have been a Paypal user for over 2 decades. Definitely not going to be using them anymore. They are stupid, if they wanted to save money they should have done away with the cash back feature, they are going to lose so many customers do to this change.
Tejas570
I've been an ebay seller and Paypal member for over 20 years. I've watched ebay and Paypal destroy e-commerce one idiotic decision after another. It all started many years ago when ebay stopped allowing digital delivery, which threw us sellers back into the Stone Ages.
Tejas570
I had placed a $47 order on Amazon using my Paypal debit card as I had done forever. I forgot the back funding was ending so now I'm being bombarded with "declined" emails from both Paypal and Amazon. The backup bank acct funding was more a super CONVENIENCE for me than anything else since I could buy on ebay or Amazon and be done with two clicks. NO MORE! I tried to enter my bank card info on Amazon but there was a glitch and threw up red flags so now I have to wait another 24 hours to re-submit the same card info all over again. And I've now had to transfer $50 from my bank to my Paypal account and now I will have to wait 3 DAYS for the transfer before I can finish paying for my Amazon order. Paypal and eBay are destroying e-commerce one idiotic decision at a time!
gary7
This is as bad a when ebay dropped Paypal, if not worse. Really screws up my accounts that I depended on the PP business card.
bearcatnat
I think this is the nail in PayPal’s coffin. With the big boys eBay and Etsy no longer processing payments through PayPal, my business debit card is all I really used PayPal for any more. But I’ve used the debit card for years as my main payment card to earn the rewards. Now I’ll barely ever use PayPal. What a joke!
Jbel9
What a joke. Liked the ability to not use my debit card from my bank. This added a little security. Now it's all credit cards for my payments. Bet PayPal is out of business in a year.
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mjysmy
Our business has been using PayPal since 2002 and have promoted it to our business clients as well. One of the main benefits that led us to PayPal was the Business debit card. By using this card we had the extra layer of protection on purchases and could use one card for all our business transactions, accounts and bills, and didn’t have to worry if there was enough money in our PayPal account because it would pull from our backup method. There was never an issue and they always got their money. The cash back was an added plus. But now, with this change, we no longer have that extra layer and we have to go into over 200 accounts and update payment methods. As a business owner, there is NO benefit to keeping our PayPal account. To have a rep tell me that I’ll just have to transfer money into PayPal seriously has no business working as a rep. If I have to keep transferring funds into PayPal then I will just transfer my business elsewhere! Unacceptable PayPal!!
Kytah00
I'm done with PayPal too. Owning a small business, and using the backup banking feature for years now, I have to look elsewhere. Why would I want to wait a couple days for money to be transferred into a PayPal account and then only have access to exactly what is in my PayPal account? What a joke! PayPal is going to lose a lot of business over this!
Davybaby
I also relied on the paypal debit mastercard with the backup funding from the bank.this feature really helped me with making purchases and the cash back was a nice feature.i too will have to look for a different company to rely on now.been with PayPal a long time and this is a huge disappointment!anyones know a good alternative company i can turn to for replacing PayPal?
ResqDogz
I have been a loyal PayPal participant since November of 1998 , both personally and professionally (PP Business Debit Mastercard, PP Credit, and PP Mastercard) - mostly for the facility of transactions using my Debit Mastercard as my de facto checking account.
At year's end (or more frequently, if need be) I could simply download and sort a CSV file and prepare taxes in a matter of hours.
Although the cash back feature was a nice touch, it was of insignificant benefit overall - which I would gladly sacrifice in order to retain direct access to funding through my credit union accounts (where I've banked since 1973).
To minimize any negative impacting on my credit scores, I shall continue to use PP Credit and the Synchrony Bank issued PP Mastercard - simply leaving the Business Debit account inactive: I am in the process of securing a debit card directly from my credit union to perform the precise functions my soon-to-be-worthless Business Debit card used to accomplish.
PayPal's claim that the loss of this function is "for the benefit" of it's clients is unadulterated bullshit: How is the inconvenient, time-consumptive, unknown/lengthy delayed process of moving in advance ("parking") substantial amounts of sums "beneficial" to anyone other than to inure to the sole benefit of PayPal's ability to access and use those funds?
PayPal will no longer benefit financially from our relationship: If they go down in flames from their continually absurd alienation of clients through boneheaded moves like this, it won't effect me: The PP Mastercard is issued by Synchrony Bank, and any remaining balance on my PP Credit line would evaporate with their demise - to MY benefit, not theirs.
You brought this upon yourselves...
At year's end (or more frequently, if need be) I could simply download and sort a CSV file and prepare taxes in a matter of hours.
Although the cash back feature was a nice touch, it was of insignificant benefit overall - which I would gladly sacrifice in order to retain direct access to funding through my credit union accounts (where I've banked since 1973).
To minimize any negative impacting on my credit scores, I shall continue to use PP Credit and the Synchrony Bank issued PP Mastercard - simply leaving the Business Debit account inactive: I am in the process of securing a debit card directly from my credit union to perform the precise functions my soon-to-be-worthless Business Debit card used to accomplish.
PayPal's claim that the loss of this function is "for the benefit" of it's clients is unadulterated bullshit: How is the inconvenient, time-consumptive, unknown/lengthy delayed process of moving in advance ("parking") substantial amounts of sums "beneficial" to anyone other than to inure to the sole benefit of PayPal's ability to access and use those funds?
PayPal will no longer benefit financially from our relationship: If they go down in flames from their continually absurd alienation of clients through boneheaded moves like this, it won't effect me: The PP Mastercard is issued by Synchrony Bank, and any remaining balance on my PP Credit line would evaporate with their demise - to MY benefit, not theirs.
You brought this upon yourselves...
rockhuff
I have two Paypal accounts. One for me personally that I used to use for Ebay, over 20 years ago, and one for my tax prep business. I have always enjoyed the debit cards for both accounts. I have cards for my wife and kids also, on my accounts. I have already canceled the cards on my tax prep business side, and will now cancel the debit cards I have left on my personal account. Total bullshit Paypal is doing this. I will end up canceling both my accounts and probably move over to Stripe. I have used Paypal for invoicing and payment collection from clients. It now appears as though for the upcoming tax season, I'll be using a different vendor to process quite a few thousands of dollars of client payments, which they got a cut of on every single transaction. This is the stupidest business move Paypal have ever made.
93ag
This surely impacts me, as I use it for daily purchases and it gave me a little extra time to pay for some things. I’m in awe. As I just found out about it. I really don’t see how this is the best move to “cut costs.” If ppl leave then they don’t get the fee money anyway. I rather them x cash back than back up funding if I’m being honest. You can still get cash back but have to put money in which takes days or already have money from a sale. I really don’t like it. I hope PayPal will reconsider or add a feature of pay later or something that won’t cost us business owners. Very sad. I’ll keep PayPal likely because it has been one of the faster payment gateways but idk now.
Robk2
Horrible decision. The little guy loses again. I've used my debit card for 10+ years. I will never again use paypal for anything as they are now useless to me. Bye, Bye Paypal. You have sealed your own fate.
KamiD
I started using PayPal in January 1999. I used eBay several times day and PayPal was great. One time my actual bank account was hacked. I called PayPal to ask them about the back up funding source and the PayPal business debit card. So I went with that because I never wanted my actual bank account info to be known only to get hacked again. I now look at my spreadsheet of all the bills etc that go thru PayPal before they goto the bank. I can’t tell you how many and the amount of time it will take for me to move everything either to my bank debit card that I don’t want to do or find another service like PayPal. I have never looked for anything similar to PayPal. If you know of one please post it. PayPal this is a major mess up!
relphs
This was the maim reason I continued my business with PayPal, WOW! well, there has to be a company out there willing to offer the back up funding perk. PLEASE SHARE IF YOU KNOW OF ONE....goodbye paypal.
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MichelleJ
I've had an account with Paypal since it was X.com, and used the Business Debit Card heavily. Admittedly, I didn't read the notice that Paypal sent so I was unaware of this change until I logged in today to request another card in an employee's name. This made managing money easy as it acted as a DMZ between my bank account and the outside world, gave me instant text messages when purchases were made, etc. I kept a couple cards for myself in case one was lost or compromised, and only had a few issues with my account being "on hold" due to a transaction being forced as a debit (gas station) and I had to add funds. Adding funds via bank transfer took way too long and twice I was forced to visit Walmart and pay to put money in my account. I felt like the world's biggest loser doing that, LOL.. Pay $5 to put money into my own account? WTH..
Once the backup funding becomes unavailable, I have alot of work to do switching any linked account to something new. Looking into alternatives.. even if I have to resort to my AMX, etc.
Once the backup funding becomes unavailable, I have alot of work to do switching any linked account to something new. Looking into alternatives.. even if I have to resort to my AMX, etc.
Cfend8
There is no point in choosing to use the paypal card ever again. It will be useless to me without the backup funding. I liked the security of no one having my bank info but paypal. Transferring money to Paypal just to use the card??? Ha! No way.
Cordie
Why would i want to have money sitting in my paypal account when its not FDIC insured? They just wrecked their business, no one is going to use it now. The CFPB sent out a warning to the general public in June or July reminding people that it is not insured and its therefore risky to leave money in your account. If paypal goes out of businessnyou are SOL.
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justintime4
I opened a no fee Discover Checking Account with a Debit Card that pays 1% cash back up to $3000 a month. It’s FDIC insured. It doesn’t have automatic backup funding but you can use Zelle to transfer funds instantly to/from another bank account. It’s definitely a safer and better alternative than transferring money from your bank to PayPal. I haven’t received the card yet. You can sign up online very quickly. Not a perfect replacement but it’s the only thing I’ve found so far that doesn’t depend on your creditworthiness.
20yrsplusPayPalCustomer
Yep. Saying it's because of necessary cutbacks is ridiculous. I spend hundreds per year in transfer fees and ATM fees etc. just to have a service that has my back in case of overspend. Say goodbye to that revenue from me PayPal.
Gfhd
Ridiculous move on their part!
A card holder for many year… will close my account on 9/13.
A card holder for many year… will close my account on 9/13.
MrC
I've been with PayPal since it was called x.com, loyal I must say... And I'm very disappointed with this news. I don't see how PayPal benefits from this decision. In any case, I too have to protect my company and the bottom line, and for that reason, I'll be leaving PayPal. It's a shame....
dlee425
Iam also looking for another company. As PayPal is going to lose a lot of business over this.
Tina Marie
Very disappointed, happy because it got me through a lot when I had to wait until payday or pay a bill quickly and deposit the money after for subscriptions I forget about. This really sucks! I loved everything about it, but good things always ends.
dochris99
Wow. What use is the PayPal debit card without the backup funding feature?
nato
My predictions - I think they will see a drop of about 25% of its user base... it will be 10% due to actual users who rely on the service and are upset. the other 15% will come within 30 days of change and outrage and neg media attention... Stripe and other players will capitalize off the change and so if you watch the $$$ market will show this to be true...
ciowa
I’m actively replacing PayPal immediately. How does this help my business? How does it help PayPal? Not many will transfer or leave a large balance with PayPal. Because that’s stupid. And 3-5 business days for every transfer back and forth. No.
Wise choice
This is a horrible change. Im glad I started using square. They are a better option you can link you bank account and their afterpay is easier for customers to qualify. They don't leave you on hold forever like PayPal and they help walk you thru setting up your product page they also help you promote online through Google and Facebook Instagram you can connect to all your account try them..www.square.com is the new chose
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Tejas570
But do Amazon and ebay accept Square? The paypal with backup funding was super convenient and I could buy with just a couple of clicks.
Shernks
As a small business I've used the Backup funding feature for years, this is an awful move for PayPal to make. I probably will barely use PayPal once it ends. I am actively looking for a new bank for my business and a solution now. We are very sad, but not at all surprised since the new manager is from Intuit! Now they'll run PayPal into the ground like they did with their other companies. I am afraid Venmo (owned by PayPal) is doing the same thing and what a huge mistake this will be for their future as well.
FormerPayPalCustomer
I am sole proprietor and have been with PayPal since nearly it's existence. I will no longer be a customer because of this change. End.
haephrati
This is a horrible change which will make the business debit card worthless
Juliatidoubleger
This is horrible, I have relied on this feature for my business for many years now, it has given me a peace of mind that my employees can use their cards without worrying about checking balances. I also have ALL of my subscriptions and most bills set up through paypal. GOOD BYE PAYPAL, its been real, super sad about this, bad move guys!!!!
