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PayPal officially announced that existing PayPal Key accounts will also stop working on April 21, so this product has now been fully discontinued and can no longer be used. PayPal Key was pretty powerful, and at first I didn’t think it was all that suitable to write about. But since more and more people seemed to be discussing it, KUKU put together a quick introduction and some ways people used it to maximize value. After our site published an introductory post, other blogs started covering it as well. At this point, you could basically say everyone was using it.

What Is PayPal Key

In simple terms, PayPal Key was a virtual credit card launched by PayPal. It could turn your PayPal Balance, US bank accounts, and US credit cards (even Visa/Master gift cards, if you were able to add them) into a PayPal Key virtual credit card. This applied to all of them, including AMEX credit cards. PayPal Key used Mastercard as its network.

PayPal Key Registration and Use

First, one thing needs to be clear: PayPal Key could only be generated from a US PayPal account, and an SSN was required.

Registration

  • Registration link
  • Your PayPal account needed to have an SSN linked in advance in order to register (New: it now also supports ITIN applications)
  • Any PayPal Business or personal PayPal account under your name could register; each account was separate and did not conflict with the others
  • There was no Hard Pull for the application.
  • After registration, there were two possible card BINs: 5205 and 5581 (once generated, they could not be changed)
  • The 5205 BIN had more use cases.

Just follow the prompts to register; in most cases it should work.

【2020.9 Update 2】While I was helping a family member apply for a PayPal account and happened to check PayPal Key, I found that PayPal Key now supports ITIN applications! Based on DPs from the WeChat reader group, this option was probably added only recently; previously it only allowed SSN information.

  • You need to register using the last four digits of your SSN or your full ITIN

If you apply for PayPal Key immediately after opening a PayPal account, or if you temporarily use an ITIN to apply, you may trigger verification and be required to upload proof of your SSN or ITIN (limited to the three document types shown below).

According to a DP from WeChat reader Guange, if the account already had an ITIN linked beforehand, the application was instantly approved. If you qualify, feel free to share more DPs!

This improvement was pretty nice. Since PP Key itself was not a credit card, it never involved a Hard Pull in the first place. Now that ITIN applications are allowed, more people can benefit from it.

Using PayPal Key

After registering, you would be asked whether to prioritize using your balance, and then to choose a linked credit card or bank account.

It provided a virtual MC card number. The billing address could be any address linked to your PayPal account. If you didn’t like the card number, your only option was to delete the Key and apply for a new one.

For each use, you could switch the underlying card before making the purchase. Just log in to PayPal and follow the prompts.

This is where you can view PayPal Key on a personal account; it appears right on the main homepage

For a PayPal Business account, it was a bit more cumbersome to find, and only appeared in the location shown below.

Where to find PP Key in a business account

Features of PayPal Key

PayPal Key may have been the most powerful virtual card ever (just the author’s opinion).

Advantages of PayPal Key

Here are six major advantages:

  • First, you could switch among any payment methods linked to PayPal
  • Second, you could cancel and reapply at any time, and the number would automatically change
  • Third, the PayPal Key BIN was, for the time being, coded as a Debit card
  • Fourth, it was on the Mastercard network and accepted in many places
  • Fifth, you could customize the Security Code (the 3-digit CVV)
  • Sixth, it could be embedded directly into your browser for easy use while shopping online

Since you could switch the linked credit card at any time, if you managed the limits on each card well, a single PayPal Key could effectively aggregate the available spending power of all your credit cards. Together with the flexibility of a changeable card number and other features, it was quite useful for people who did a lot of online shopping.

The third feature was especially powerful. Here are a few examples, and feel free to share more usage tips:

  • In Amazon, PayPal Key was shown directly as a Debit card, which made it especially useful.
  • When paying IRS taxes, the PayPal Key virtual card incurred almost no fee because it was treated as a Debit card. Pretty amazing.
  • When paying certain fines or rent online, using PayPal Key as a Debit card also meant the fee was almost negligible

The BIN issue would probably be fixed in the future (similar to CCB’s Bonus+ credit card, which initially coded as Debit and was later corrected). If you wanted to take advantage of it, earlier was better.

The fourth feature was that it was on the Mastercard network. So if a merchant did not accept AMEX credit cards, you could switch to PayPal Key to make the purchase.

The fifth feature was customizable CVV. You could set it to a number you like—for example, “101” is pretty nice.

The sixth feature—embedding it into your browser—is straightforward. Combined with a custom CVV, it made online card use very convenient.

Purchase Categories and Merchant Coding

Normal merchant purchases were generally recognized as PayPal purchases, so they worked fine. For some special transactions, it was unclear whether there might be Cash Advance risk in the future. At the time, there was none. But if too many people started using it to pay taxes, use Plastiq, or conduct other cash-equivalent transactions, it was possible that CA treatment could eventually be enforced.

Merchant coding seemed to depend somewhat on the card network. Some credit cards offered category bonuses at specific merchants, and those bonuses could still be triggered even when paying through PayPal, such as with certain AMEX cards.

AMEX Merchant Coding

At present, all purchases made through PayPal Key were temporarily coded as PP*Merchant. It was unclear whether merchant category bonus earnings could still be triggered after the transaction posted. However, according to the description on the PayPal statement, once the transaction posts, it would be correctly identified as the corresponding merchant. It remains unknown whether the bonus rewards multiplier would be triggered.

Merchant recognition for Discover

Discover seems able to correctly identify the merchant while a charge is still Pending. According to reader Edward’s DP, when using PayPal Key online (linked to Discover) at Costco, it can show up as PayPal *WWW Costco COM.

Merchant recognition for V/M

Visa/Mastercard usually have the same merchant recognition, but the author did not have time to test it. My guess is that they will identify the correct merchant directly. Please report more DPs on merchant recognition, both Pending and Post.

Using PayPal where PayPal is not accepted

The main use case is pairing it with credit cards that earn 5% on quarterly PayPal purchases, such as Discover or Chase Freedom. You can use the virtual card number from PayPal Key to turn purchases at merchants that do not accept PayPal into PayPal purchases. For example, Amazon and Google Shopping do not accept direct payment with PayPal, but they do accept the Mastercard virtual card from PayPal Key. This lets you turn those purchases into PayPal purchases and also earn 5% cash back.

Another typical example is Costco. Its online shopping does not support AMEX credit cards, but now you can use PayPal Key as a workaround.

Layering / nesting use cases

Besides normal usage, PayPal Key should also work with other virtual or physical credit cards and V/M gift cards to create a kind of “nesting” effect. If you are interested, feel free to explore it on your own.

Main drawbacks

  • Requires a US PayPal account
  • Requires an SSN
  • Does not currently support international credit cards [according to reader Zeeeee’s DP, Chinese credit cards cannot be linked]
  • The merchant may not be identified correctly on the underlying linked card. For example, AMEX may show it as PP*Merchant, so the category is simply a PayPal purchase and may not trigger certain bonus category rewards on some cards
  • Cannot be added to Apple Pay or other mobile wallets
  • Cannot be linked to AMEX Serve (likely because PayPal has directly banned Serve on its end)
  • There is an FTF (foreign transaction fee), so it is not recommended for use outside the US
*A foreign transaction fee applies to cross-border and cross-currency transactions. Usage fees charged by merchants or other entities besides PayPal may apply.

[2020.9 update] According to DOC, some PayPal Key transactions have been posted by card issuers as Cash Advance (CA), though there are not many details yet. Be sure to check how the transaction looks after it posts to your statement, especially if you are using a VISA/Master credit card, where the CA risk appears broader. If you do get hit with a CA, it is best to pay it off the same day it posts; otherwise you may owe very high interest.

Just as we predicted earlier, PayPal will not block this type of usage, but it may suddenly classify something as a Cash Advance. Normal purchases, however, should be fine. For example, using PayPal Key at Amazon, Costco, or Google Shopping is compliant.

According to DPs from readers in the WeChat group, payments for taxes, rent, tuition, Plastiq, and similar uses do not seem to have been coded as CA so far. The cases that were coded as CA were likely other more aggressive methods. More DPs are welcome.

Other notes and a roundup of DPs

See this 101 news post:

Is PayPal Key risky?

First, to be clear: PayPal has always been pretty ruthless. If you abuse things too much, your account can be shut down directly, so keep it moderate. Use PayPal regularly to keep your account active. If you rarely use PayPal, then using PayPal Key may be more likely to trigger declines.

PayPal Key itself is a virtual card, and virtual cards are very useful tools for maximizing deals, handling subscriptions, preventing fraud, and so on. There should be no problem using it for normal merchant transactions, and even high volume should probably be fine, since the original purpose of PP Key is to facilitate normal transactions.

If you use it for paying taxes, Plastiq, or buying cash equivalents, there does not appear to be a CA risk at the moment, but it is hard to say about the future. It is a good idea to check your statement details after the transaction posts, just in case things turn against you. Also, too much of this kind of abuse is dangerous and carries shutdown risk.

Overall, KUKU still recommends signing up and using it for normal merchant transactions. Of course, if you do not want PayPal to be linked with your SSN, then do not sign up.

Finally, to emphasize again: there is an FTF (foreign transaction fee), so it is not recommended for use outside the US.

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