---
title: "Set up PayPal"
description: "Create a PayPal environment and add PayPal to your Customer Area."
url: "https://docs.adyen.com/payment-methods/paypal/setup-paypal-direct-merchants"
source_url: "https://docs.adyen.com/payment-methods/paypal/setup-paypal-direct-merchants.md"
canonical: "https://docs.adyen.com/payment-methods/paypal/setup-paypal-direct-merchants"
last_modified: "2026-06-01T15:33:15+02:00"
language: "en"
---

# Set up PayPal

Create a PayPal environment and add PayPal to your Customer Area.

[View source](/payment-methods/paypal/setup-paypal-direct-merchants.md)

If you are a marketplace, follow the PayPal [setup instructions for marketplaces](/payment-methods/paypal/setup-paypal-marketplaces).

To enable test PayPal payments, you need to:

1. [Create PayPal sandbox accounts](#dev-sandbox-accounts).
2. [Set up PayPal in your test Customer Area](?tab=add-ca-test_1#add-paypal).\
   We will send you an activation link.
3. Use your activation link to [give Adyen permission](#permission) to process transactions on your PayPal business sandbox account.

When you go live, you need to:

1. [Create a live PayPal business account](#go-live).
2. [Set up PayPal in your live Customer Area](?tab=add-ca-live_2#add-paypal).\
   We will send you an activation link
3. Use your activation link to [give Adyen permission](#permission) to process transactions on your live PayPal business account.

## Create PayPal sandbox accounts

To test your integration, you need to have three PayPal accounts:

* A PayPal developer account.
* A PayPal **business** sandbox account.
* A PayPal **personal** sandbox account.

To be able to see your test payments later, it is important that you create your [sandbox accounts](https://developer.paypal.com/api/rest/) under your PayPal [developer account](https://developer.paypal.com/api/rest/).

1. [Create a PayPal developer account](https://developer.paypal.com/api/rest/), if you do not already have one.

2. Under your PayPal developer account, [create a PayPal **business** sandbox account](https://developer.paypal.com/tools/sandbox/accounts/#create-a-business-sandbox-account).\
   This account lets you simulate receiving payments as a merchant when testing payments.

3. Under your PayPal developer account, [create a PayPal **personal** sandbox account](https://developer.paypal.com/tools/sandbox/accounts/#link-createapersonalsandboxaccount).\
   This account lets you simulate making payments as a shopper when testing payments.

## Add PayPal to your Customer Area

When you add PayPal to your test or live Customer Area, you need to provide some details specifically for PayPal.

### Tab: Test

When you [add PayPal as a payment method](/payment-methods/add-payment-methods) to your [test Customer Area](https://ca-test.adyen.com/):

* Specify an email address where you want to receive the activation link. This does not have to be the email address of your PayPal account.
* You do not need to enter your PayPal **Merchant ID**. Adyen automatically retrieves this after you have completed the activation link.
* By default, PayPal payments are captured immediately after authorisation. If you want to capture payments later, select **Enable authorisation & capture**.
* By default, recurring transactions are enabled for PayPal.

### Tab: Live

When you [add PayPal as a payment method](/payment-methods/add-payment-methods) to your [live Customer Area](https://ca-live.adyen.com/):

* Specify an email address where you want to receive the activation link. This does not have to be the email address of your PayPal account.
* You do not need to enter your PayPal **Merchant ID**. Adyen automatically retrieves this after you have completed the activation link.
* By default, PayPal payments are captured immediately after authorisation. If you want to capture payments later, select **Enable authorisation & capture**.
* By default, recurring transactions are enabled for PayPal.

In your Customer Area, PayPal is now marked with an "inactive reason" of **Activation link sent to your inbox**.

## Give Adyen permission

You need to inform PayPal that you allow Adyen to process transactions on your PayPal account. To enable you to do that, we send you an email with an activation link as soon you have added PayPal in your Customer Area. **The activation link is valid for seven days after receiving it (for both test and live)**.

* For both test and live, you receive the activation link on the email address you provided in your Customer Area.
* You can also get the activation link from your [test Customer Area](https://ca-test.adyen.com/) or [live Customer Area](https://ca-live.adyen.com/) > **Settings** > **Payment methods**: select PayPal and in the details pane find the link under **Acquirer account**, in the **MID** field. If you cannot retrieve the activation link, ask our [Support Team](https://ca-test.adyen.com/ca/ca/contactUs/support.shtml?form=other) to send the link to an email address of your choosing.

When you receive the email:

1. Open the activation link.

2. Log in to the PayPal:

   * For test, log in with the business sandbox account you generated in the PayPal developer dashboard.
   * For live, log in with the email address that is the username of your live PayPal business account.

3. Accept all permissions that Adyen is asking for.

Within the same business day, the status of PayPal in your Customer Area will change to **Active**. If this doesn't happen, ask our [Support Team](https://ca-test.adyen.com/ca/ca/contactUs/support.shtml?form=other) to set PayPal to Active manually.

## Create a live PayPal business account

For live operations, you need to set up a **live PayPal business account**:

1. Go to the [PayPal website](https://www.paypal.com/), select **Sign Up**, and follow the instructions.

   Do not use a personal email address for your live PayPal business account. We strongly recommend that you use a generic company email address. This prevents having to configure a new account for your business in the future, if the personal email address is no longer be in use for any reason. The email address for your live PayPal business account will also be shown on the payment receipt the shopper receives from PayPal.

2. [Activate](https://www.paypal.com/c2/webapps/mpp/how-to-guides/activate-your-business-account?locale.x=en_C2) your business account.

3. Make a note of the email address associated with this PayPal account, because you need to provide the address in your live Customer Area.

Do not forget that to go live, you also need to:

1. [Set up PayPal in your live Customer Area](?tab=add-ca-live_2#add-paypal).
2. Open the activation link and [give Adyen permission](#permission) to process transactions on your live PayPal business account.
