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I know how to transfer and setup of bank account to PayPal. My concern is if my bank is connected to PayPal, and how will bank know the transactions and PayPal balance?

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Both financial institutions have you as a customer. They care about protecting your assets, and being able to provide financial services in a timely, efficient, and secure manner.

To transfer funds from one institution to another, they need to know that the transaction is authorized, the amount of the transaction, and some method of knowing the transaction was completed. They also keep records regarding that transaction. These records contain time/date, routing numbers, account numbers, amount and the confirmation code.

The two institutions have no reason to expose more of their valuable data to another financial institution beyond the minimum amount to complete the transaction.

My concern is if my bank is connected to PayPal, and how will bank know the transactions and PayPal balance?

PayPal doesn't want to give a list of transactions to your bank. That exposes more data than necessary to complete the transaction. They don't make a habit of telling another financial institution your account balance. That would expose data that isn't necessary.

If you have recently linked two accounts together they typically ask you to verify a pair of micro transfers. One place sends two small amount of money, then reverses those same transactions a short time later. You are given time to see the transactions and report the amount of each transaction. If you get the numbers right they know you have the ability to see the transactions in the other account. Notice they didn't just download the balance and ask you to confirm the balance.

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The bank will know that PayPal withdrew or deposited money in your account at the bank.

But the bank will not have any visibility into your PayPal account itself.

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  • While this answer matches my own understanding of how it works, I think it would be better with references / cites to demonstrate this. I didn't answer myself because I don't know how to prove it.
    – Vicky
    Commented Dec 8, 2021 at 10:47
  • I cannot cite anything to prove this either. It's just how these things work.
    – jwh20
    Commented Dec 8, 2021 at 13:56

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