diff --git a/includes/class-wc-install.php b/includes/class-wc-install.php
index 9a78baacaa9..ea22c5231aa 100644
--- a/includes/class-wc-install.php
+++ b/includes/class-wc-install.php
@@ -310,6 +310,7 @@ class WC_Install {
 		self::create_files();
 		self::maybe_create_pages();
 		self::maybe_set_activation_transients();
+		self::set_paypal_standard_load_eligibility();
 		self::update_wc_version();
 		self::maybe_update_db_version();
 
@@ -1635,6 +1636,18 @@ CREATE TABLE {$wpdb->prefix}wc_reserved_stock (
 			ob_end_clean();
 		}
 	}
+
+	/**
+	 * Sets whether PayPal Standard will be loaded on install.
+	 *
+	 * @since 5.5.0
+	 */
+	private static function set_paypal_standard_load_eligibility() {
+		// Initiating the payment gateways sets the flag.
+		if ( class_exists( 'WC_Gateway_Paypal' ) ) {
+			( new WC_Gateway_Paypal() )->should_load();
+		}
+	}
 }
 
 WC_Install::init();
diff --git a/includes/class-wc-payment-gateways.php b/includes/class-wc-payment-gateways.php
index c6114ef68c7..04520322ee0 100644
--- a/includes/class-wc-payment-gateways.php
+++ b/includes/class-wc-payment-gateways.php
@@ -78,9 +78,12 @@ class WC_Payment_Gateways {
 			'WC_Gateway_BACS',
 			'WC_Gateway_Cheque',
 			'WC_Gateway_COD',
-			'WC_Gateway_Paypal',
 		);
 
+		if ( $this->should_load_paypal_standard() ) {
+			$load_gateways[] = 'WC_Gateway_Paypal';
+		}
+
 		// Filter.
 		$load_gateways = apply_filters( 'woocommerce_payment_gateways', $load_gateways );
 
@@ -219,4 +222,15 @@ class WC_Payment_Gateways {
 
 		update_option( 'woocommerce_gateway_order', $order );
 	}
+
+	/**
+	 * Determines if PayPal Standard should be loaded.
+	 *
+	 * @since 5.5.0
+	 * @return bool Whether PayPal Standard should be loaded or not.
+	 */
+	protected function should_load_paypal_standard() {
+		$paypal = new WC_Gateway_Paypal();
+		return $paypal->should_load();
+	}
 }
diff --git a/includes/gateways/paypal/class-wc-gateway-paypal.php b/includes/gateways/paypal/class-wc-gateway-paypal.php
index 68a8095ad22..e6390151214 100644
--- a/includes/gateways/paypal/class-wc-gateway-paypal.php
+++ b/includes/gateways/paypal/class-wc-gateway-paypal.php
@@ -473,4 +473,42 @@ class WC_Gateway_Paypal extends WC_Payment_Gateway {
 
 		return $text;
 	}
+
+	/**
+	 * Determines whether PayPal Standard should be loaded or not.
+	 *
+	 * By default PayPal Standard isn't loaded on new installs or on existing sites which haven't set up the gateway.
+	 *
+	 * @since 5.5.0
+	 *
+	 * @return bool Whether PayPal Standard should be loaded.
+	 */
+	public function should_load() {
+		$option_key  = '_should_load';
+		$should_load = $this->get_option( $option_key );
+
+		if ( '' === $should_load ) {
+
+			// New installs without PayPal Standard enabled don't load it.
+			if ( 'no' === $this->enabled && WC_Install::is_new_install() ) {
+				$should_load = false;
+			} else {
+				$should_load = true;
+			}
+
+			$this->update_option( $option_key, wc_bool_to_string( $should_load ) );
+		} else {
+			$should_load = wc_string_to_bool( $should_load );
+		}
+
+		/**
+		 * Allow third-parties to filter whether PayPal Standard should be loaded or not.
+		 *
+		 * @since 5.5.0
+		 *
+		 * @param bool              $should_load Whether PayPal Standard should be loaded.
+		 * @param WC_Gateway_Paypal $this        The WC_Gateway_Paypal instance.
+		 */
+		return apply_filters( 'woocommerce_should_load_paypal_standard', $should_load, $this );
+	}
 }
diff --git a/tests/e2e/core-tests/specs/shopper/front-end-checkout.test.js b/tests/e2e/core-tests/specs/shopper/front-end-checkout.test.js
index 46bf8121eff..812d7385d25 100644
--- a/tests/e2e/core-tests/specs/shopper/front-end-checkout.test.js
+++ b/tests/e2e/core-tests/specs/shopper/front-end-checkout.test.js
@@ -69,14 +69,6 @@ const runCheckoutPageTest = () => {
 			// Verify that settings have been saved
 			await verifyCheckboxIsSet('#woocommerce_cod_enabled');
 
-			// Enable PayPal payment method
-			await merchant.openSettings('checkout', 'paypal');
-			await setCheckbox('#woocommerce_paypal_enabled');
-			await settingsPageSaveChanges();
-
-			// Verify that settings have been saved
-			await verifyCheckboxIsSet('#woocommerce_paypal_enabled');
-
 			await merchant.logout();
 		});
 
@@ -93,7 +85,6 @@ const runCheckoutPageTest = () => {
 			await shopper.goToCheckout();
 			await shopper.productIsInCheckout(simpleProductName, `2`, twoProductPrice, twoProductPrice);
 
-			await expect(page).toClick('.wc_payment_method label', {text: 'PayPal'});
 			await expect(page).toClick('.wc_payment_method label', {text: 'Direct bank transfer'});
 			await expect(page).toClick('.wc_payment_method label', {text: 'Cash on delivery'});
 		});
diff --git a/tests/legacy/bootstrap.php b/tests/legacy/bootstrap.php
index fd8bfb96dce..3b648590f14 100644
--- a/tests/legacy/bootstrap.php
+++ b/tests/legacy/bootstrap.php
@@ -58,6 +58,9 @@ class WC_Unit_Tests_Bootstrap {
 		// load test function so tests_add_filter() is available.
 		require_once $this->wp_tests_dir . '/includes/functions.php';
 
+		// Always load PayPal Standard for unit tests.
+		tests_add_filter( 'woocommerce_should_load_paypal_standard', '__return_true' );
+
 		// load WC.
 		tests_add_filter( 'muplugins_loaded', array( $this, 'load_wc' ) );