Yes it does. You can link both , the mastercard and the bank account. Funny thing is that when you link you credit card , and try to verify your card, PayPal buill 1,5 euro to the card and sends a verification code. With n26 you get the transaction containing the code immdeiately, and you just write down the code and hups! your card is verified and limts lifted on it. N26 is a fully fledged bank. What you can do with your bank , you can do it with N26. One think you cannot do though, as far as i am aware, you cannot send international swift transfer outside SEPA zone using n26, not even to US. The mastercard works seemlessly worldwide. There is no transaction fees or marginal charged to the card when paying with the card (which is always hidden and not mentioned with almost all other banks). The card uses mastercard transfert rates which is very hard to beat. I am saying this because when chosing which transfer rate to pick when purchasing with PayPal in a different currency , always pick the one of the mastercard.
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