diff --git a/modules/ppcp-wc-gateway/src/Gateway/class-paypalgateway.php b/modules/ppcp-wc-gateway/src/Gateway/class-paypalgateway.php
index 667cd2766..e1aadeb83 100644
--- a/modules/ppcp-wc-gateway/src/Gateway/class-paypalgateway.php
+++ b/modules/ppcp-wc-gateway/src/Gateway/class-paypalgateway.php
@@ -96,6 +96,13 @@ class PayPalGateway extends \WC_Payment_Gateway {
 	 */
 	private $refund_processor;
 
+	/**
+	 * Whether the plugin is in onboarded state.
+	 *
+	 * @var bool
+	 */
+	private $onboarded;
+
 	/**
 	 * PayPalGateway constructor.
 	 *
@@ -132,8 +139,9 @@ public function __construct(
 		$this->session_handler          = $session_handler;
 		$this->refund_processor         = $refund_processor;
 		$this->transaction_url_provider = $transaction_url_provider;
+		$this->onboarded                = $state->current_state() === State::STATE_ONBOARDED;
 
-		if ( $state->current_state() === State::STATE_ONBOARDED ) {
+		if ( $this->onboarded ) {
 			$this->supports = array( 'refunds' );
 		}
 		if (
@@ -185,7 +193,7 @@ public function __construct(
 	 */
 	public function needs_setup(): bool {
 
-		return true;
+		return ! $this->onboarded;
 	}
 
 	/**
@@ -373,4 +381,20 @@ public function get_transaction_url( $order ): string {
 
 		return parent::get_transaction_url( $order );
 	}
+
+	/**
+	 * Updates WooCommerce gateway option.
+	 *
+	 * @param string $key The option key.
+	 * @param string $value The option value.
+	 * @return bool|void
+	 */
+	public function update_option( $key, $value = '' ) {
+		parent::update_option( $key, $value );
+
+		if ( 'enabled' === $key ) {
+			$this->config->set( 'enabled', 'yes' === $value );
+			$this->config->persist();
+		}
+	}
 }
diff --git a/tests/PHPUnit/WcGateway/Gateway/WcGatewayTest.php b/tests/PHPUnit/WcGateway/Gateway/WcGatewayTest.php
index 716a86ac2..f46ac5865 100644
--- a/tests/PHPUnit/WcGateway/Gateway/WcGatewayTest.php
+++ b/tests/PHPUnit/WcGateway/Gateway/WcGatewayTest.php
@@ -4,6 +4,7 @@
 namespace WooCommerce\PayPalCommerce\WcGateway\Gateway;
 
 
+use Psr\Container\ContainerInterface;
 use WooCommerce\PayPalCommerce\Onboarding\State;
 use WooCommerce\PayPalCommerce\Session\SessionHandler;
 use WooCommerce\PayPalCommerce\Subscription\Helper\SubscriptionHelper;
@@ -365,6 +366,45 @@ public function testCaptureAuthorizedPaymentNoActionableFailures($lastStatus, $e
 
         $this->assertFalse($testee->capture_authorized_payment($wcOrder));
     }
+    
+    /**
+     * @dataProvider dataForTestNeedsSetup
+     */
+    public function testNeedsSetup($currentState, $needSetup)
+    {
+    	expect('is_admin')->andReturn(true);
+    	$settingsRenderer = Mockery::mock(SettingsRenderer::class);
+    	$orderProcessor = Mockery::mock(OrderProcessor::class);
+    	$authorizedOrdersProcessor = Mockery::mock(AuthorizedPaymentsProcessor::class);
+    	$authorizeOrderActionNotice = Mockery::mock(AuthorizeOrderActionNotice::class);
+    	$config = Mockery::mock(ContainerInterface::class);
+    	$config
+		    ->shouldReceive('has')
+		    ->andReturn(false);
+    	$sessionHandler = Mockery::mock(SessionHandler::class);
+    	$refundProcessor = Mockery::mock(RefundProcessor::class);
+    	$onboardingState = Mockery::mock(State::class);
+    	$onboardingState
+		    ->expects('current_state')
+		    ->andReturn($currentState);
+    	$transactionUrlProvider = Mockery::mock(TransactionUrlProvider::class);
+    	$subscriptionHelper = Mockery::mock(SubscriptionHelper::class);
+    	
+    	$testee = new PayPalGateway(
+    		$settingsRenderer,
+		    $orderProcessor,
+		    $authorizedOrdersProcessor,
+		    $authorizeOrderActionNotice,
+		    $config,
+		    $sessionHandler,
+		    $refundProcessor,
+		    $onboardingState,
+		    $transactionUrlProvider,
+		    $subscriptionHelper
+	    );
+    	
+    	$this->assertSame($needSetup, $testee->needs_setup());
+    }
 
     public function dataForTestCaptureAuthorizedPaymentNoActionableFailures() : array
     {
@@ -383,4 +423,13 @@ public function dataForTestCaptureAuthorizedPaymentNoActionableFailures() : arra
             ],
         ];
     }
+    
+    public function dataForTestNeedsSetup(): array
+    {
+    	return [
+    		[State::STATE_START, true],
+		    [State::STATE_PROGRESSIVE, true],
+		    [State::STATE_ONBOARDED, false]
+	    ];
+    }
 }