diff --git a/modules/ppcp-settings/src/Service/AuthenticationManager.php b/modules/ppcp-settings/src/Service/AuthenticationManager.php
index 1eaef1aae..b7d308669 100644
--- a/modules/ppcp-settings/src/Service/AuthenticationManager.php
+++ b/modules/ppcp-settings/src/Service/AuthenticationManager.php
@@ -398,11 +398,15 @@ class AuthenticationManager {
 		$this->common_settings->set_merchant_data( $connection );
 		$this->common_settings->save();
 
-		/**
-		 * Broadcast that the plugin connected to a new PayPal merchant account.
-		 * This is the right time to initialize merchant relative flags for the
-		 * first time.
-		 */
-		do_action( 'woocommerce_paypal_payments_authenticated_merchant' );
+		if ( $this->common_settings->is_merchant_connected() ) {
+			$this->logger->info( 'Merchant successfully connected to PayPal' );
+
+			/**
+			 * Broadcast that the plugin connected to a new PayPal merchant account.
+			 * This is the right time to initialize merchant relative flags for the
+			 * first time.
+			 */
+			do_action( 'woocommerce_paypal_payments_authenticated_merchant' );
+		}
 	}
 }
diff --git a/modules/ppcp-settings/src/SettingsModule.php b/modules/ppcp-settings/src/SettingsModule.php
index d104ce7a4..59f752545 100644
--- a/modules/ppcp-settings/src/SettingsModule.php
+++ b/modules/ppcp-settings/src/SettingsModule.php
@@ -9,8 +9,9 @@ declare( strict_types = 1 );
 
 namespace WooCommerce\PayPalCommerce\Settings;
 
-use WooCommerce\PayPalCommerce\Settings\Endpoint\RestEndpoint;
 use WooCommerce\PayPalCommerce\Settings\Ajax\SwitchSettingsUiEndpoint;
+use WooCommerce\PayPalCommerce\Settings\Data\OnboardingProfile;
+use WooCommerce\PayPalCommerce\Settings\Endpoint\RestEndpoint;
 use WooCommerce\PayPalCommerce\Settings\Handler\ConnectionListener;
 use WooCommerce\PayPalCommerce\Vendor\Inpsyde\Modularity\Module\ExecutableModule;
 use WooCommerce\PayPalCommerce\Vendor\Inpsyde\Modularity\Module\ModuleClassNameIdTrait;
@@ -203,6 +204,29 @@ class SettingsModule implements ServiceModule, ExecutableModule {
 			}
 		);
 
+		add_action(
+			'woocommerce_paypal_payments_merchant_disconnected',
+			static function () use ( $container ) : void {
+				$onboarding_profile = $container->get( 'settings.data.onboarding' );
+				assert( $onboarding_profile instanceof OnboardingProfile );
+
+				$onboarding_profile->set_completed( false );
+				$onboarding_profile->set_step( 0 );
+				$onboarding_profile->save();
+			}
+		);
+
+		add_action(
+			'woocommerce_paypal_payments_authenticated_merchant',
+			static function () use ( $container ) : void {
+				$onboarding_profile = $container->get( 'settings.data.onboarding' );
+				assert( $onboarding_profile instanceof OnboardingProfile );
+
+				$onboarding_profile->set_completed( true );
+				$onboarding_profile->save();
+			}
+		);
+
 		return true;
 	}