You can link it but it doesn't really do anything special yet though. I linked my paper one. Yes, the RFID card is what you need for now.
I just got the latest Passholder newsletter today and it says, if you still have paper, upgrade to an RFID card. Which I will do in November. It also says we'll have FP+ "later this year" and magic bands "in the coming months". Almost makes it sound like we'll have FP+ before we get the bands. But who knows.