Is PayPal a bank? Is there FDIC insurance on funds deposited to my PayPal account?
Jalaj Mani avatar
Written by Jalaj Mani
Updated over a week ago

PayPal is not a bank and does not itself take deposits. You will not receive any interest on the funds in your PayPal Cash Plus account. Funds you hold in a PayPal Cash Plus account are not insured by the FDIC unless you have successfully requested a PayPal Cash Card. The PayPal Cash Card is a debit card linked to your PayPal Cash Plus balance. If you have successfully requested a PayPal Cash Card, then Paypal will deposit the funds in your PayPal Cash Plus account into a pooled deposit account held by Paypal for your benefit at an FDIC-insured bank. This structure used for accounts with a PayPal Cash Card is intended to provide the funds in your PayPal Cash Plus account with the benefit of pass-through FDIC insurance up to applicable limits.

When you enroll in PayPal features that include pass-through insurance (currently only available to select U.S. customers in beta), all funds held in U.S. Dollars (USD) in your PayPal Cash Plus balance will be deposited by PayPal into one or more custodial accounts that they have set up at FDIC-insured banks. Presently, Paypal deposits all of those funds into an account at Wells Fargo Bank, N.A., but they can move the funds to custodial accounts at other FDIC-insured banks chosen by Paypal at any time and without notice.
If one of the banks in which Paypal have deposited your funds fails, your funds should be eligible to be insured by the FDIC up to the standard deposit insurance amount (currently $250,000). When determining your coverage limit, the FDIC will add the funds in your eligible PayPal Cash Plus account to the amounts you have on deposit in other accounts you have at the same bank.

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