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PayPal launches debit and credit card with up to 1.5% cashback – how does it work?
The new cards let you use your PayPal balance or credit in shops, while earning points back on your everyday spending
PayPal has shaken up its UK offering with the launch of a debit card, credit card and loyalty scheme.
The online payment platform is expanding how you can use your account, adding cards and a new points scheme that rewards most purchases made through PayPal.
But whether the rewards add up depends heavily on how you pay and how much of your spending you’re willing to route through PayPal.
Here, Which? explains how the new cards and membership scheme work, and what to consider before signing up.
What is PayPal?
PayPal is an online payment system that lets you send, spend and receive money.
You'll often see PayPal offered as a payment option at online checkouts, and it lets you shop using money stored in a digital wallet (known as your PayPal balance) or via a debit or credit card linked to your account.
PayPal also offers traditional credit and 'buy now, pay later' payment options. PayPal Credit offers four months interest-free on purchases from £99, and PayPal Pay in 3 lets you split the cost of purchases over three interest-free instalments.
- Find out more: buy now, pay later explained
How do PayPal cards work?
The PayPal debit card sits alongside your PayPal balance and can be used for everyday spending in shops or online, as well as for cash withdrawals at cashpoints.
You’ll get a digital version straight away, with a free physical card available to order in the app. There are no fees for using the debit card abroad.
If you use PayPal Credit, you can now apply for a virtual or physical card that lets you spend your credit in-store rather than being limited to online purchases.
A 2.5% fee applies when using the credit card abroad.
Both cards are issued by Mastercard.
- Find out more: best credit card deals November 2025
How does the PayPal+ loyalty scheme work?
PayPal+ is free to join and can be activated in the app. You earn points whenever you pay through PayPal, whether that’s using your balance, PayPal Credit, Pay in 3 or a linked card. These earn one point for every £10 you spend.
If you pay using the PayPal debit card, you earn one point for every £1 spent.
The PayPal+ scheme has three tiers based on how many points you've collected. Which tier you're in determines the value of your points and provides extra benefits, such as cashback on subscriptions.
You have a year to qualify for the next tier before your points reset, and once you hit a tier, you have access to it until the end of the next calendar year. For example, if you join PayPal+ in January 2026 and earn 25,000 points by November 2026, you'll be in the Gold tier until the end of 2027.
This table shows the value of points and extra benefits at each membership tier.
| Blue (0-24,999 points) | Gold (25,000-49,999 points) | Black (50,000+ points) |
|---|---|---|
| 100 points = £1 | 100 points = £1.20, or £1.50 in grocery, dining and food purchases Earn 100% cashback on subscriptions (up to £12.50 a month) Earn 1,000 points a month when you spend more than £10 with PayPal on the first Friday of every month | 100 points = £1.30, or £1.50 in grocery, dining and food purchases Earn 100% cashback on subscriptions (up to £12.50 a month) Earn 2,000 points a month when you spend more than £10 with PayPal on the first Friday of every month |
How does PayPal+ compare?
PayPal+ offers the equivalent of 1% cashback when you spend with the PayPal debit card, putting it in line with the highest-paying cashback cards.
The rate can rise to 1.5% on selected purchases if you reach the Gold or Black tiers, but you’d need to put a substantial amount of spending – at least £25,000 – through PayPal to get there.
However, once you reach the Gold and Black tiers, you can earn up to £270 and £440 respectively in additional cashback per year from subscriptions and spending rewards.
If you don't plan to spend that much via PayPal, it’s worth looking beyond the headline rate. For example, the American Express Everyday Cashback card pays 5% for the first five months (up to £125), giving a much bigger boost in year one before dropping to 0.5% afterwards.
- Find out more: best cashback and rewards card
How to earn double rewards with PayPal+
If you already have an existing cashback credit card, you can earn two sets of rewards on the same purchase by linking your existing card to your PayPal account and paying through PayPal at checkout (subject to your card issuer's terms).
In this setup, PayPal+ gives you points for using PayPal, and your existing card provider gives you its usual cashback or points because the payment still goes through your card in the background.
But there are important drawbacks. When you pay with a credit card via PayPal, you may lose Section 75 protection, which usually gives you stronger rights if something goes wrong with a purchase costing between £100 and £30,000.
And because PayPal+ gives you only one point for every £10 spent this way, you’d need to put £1,000 through PayPal to earn just £1 in PayPal+ value.
For bigger purchases, the protection you lose is likely worth more than the extra points you gain.
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Is it safe to shop with PayPal?
The protection you get depends on how you pay through PayPal – and the rules differ for online and in-store purchases.
Eligible purchases made online using the PayPal debit card or credit card, bank account or PayPal balance are protected by PayPal Buyer Protection. This lets you request a refund if an item doesn’t arrive or isn’t as described.
Buyer Protection doesn’t apply when you use the PayPal debit or credit card in shops.
Payments made with the PayPal debit or credit card – online or in-store – are also covered by chargeback, which allows you to dispute a card transaction with your bank if something goes wrong, such as goods arriving damaged or not turning up at all.
Section 75 protection applies only when you pay directly with regulated PayPal Credit for purchases costing between £100 and £30,000. It doesn’t apply when you use Pay in 3, as buy now, pay later is unregulated.
You can also lose Section 75 protection if you choose to pay via PayPal using another credit card instead of paying with the credit card directly.
- Find out more: make a Section 75 or chargeback claim
