Comments on: PayPal Discourages Use of Credit Cards

By: freddy1

freddy1 — Tue, 17 Nov 2009 14:46:00 +0000

Heavily agree with henri 11/15 paragraph 1.

I only had my cash back cc listed on Paypal until they notified me during a recent transaction that I had hit a $10,000 limit which alarmed me at first as it made me think my current transaction of $80 was being seen as alot more. After checking the Paypal account on a fresh page, it informed me I need to verify account by supplying a bank account or applying for a pal plus mastercard. I did the mastercard and now it is primary and I cannot switch the primary back to my cc, but I am allowed to select it during each transaction. What an underhanded attempt to re-route my purchasing preferences. My credit rating is excellent and I refuse to publish my bank account numbers to ANYONE. I do trust my cc company as they have proven to me personally that they monitor my account with MY best interests in mind, providing a very high level of protection. Need an alternative to paypal, but being ebay owned, I doubt that will happen.

By: henri

henri — Mon, 16 Nov 2009 03:10:16 +0000

Anyone who thinks paypal does this to be “responsible” is either paternalistic or just dumb enough to be a cash cow to the credit industry. There is nothing irresponsible about credit card usage – however, using them without paying the monthly balance in full is not only irresponsible but also downright retarded. If you use your cash-back credit card wisely you will never pay a dime to the CC company, while earning cash back on your purchases (in effect, you are making use of the bargaining power of the credit card company to get a better price from the retailer)

Paypal is just trying to save the merchant fees, as noted in some comments above. I find it annoying – of course I don’t want them to charge my bank account immediately if I can also pay through my CC and not only get one month of grace period (time value of money) but also cash back.

By: Raman

Raman — Mon, 09 Nov 2009 17:21:25 +0000

It is a simple equation of risk management. Credit card transactions have build in risk for fraud, that could be of identity theft or merchant related. If you are not satisfied with the product or simply it was not you who made the purchase then you can pick up the phone and call your credit card and they will remove the charges. If you had paid using your Paypal account then good luck. It will be a challenge to get your money back. Paypal does not do the level of risk management that comes with credit card purchase.

By: sarah_c

sarah_c — Mon, 26 Oct 2009 11:44:48 +0000

hey Madison how did u manage to use Paypal without using a credit card? i only want to use paypal while paying through my bank account too but it keeps asking me for a credit card Visa or Mastercard number!!!

By: Patrick

Patrick — Wed, 21 Oct 2009 16:34:53 +0000

I’ve noticed this too, and it can get annoying. but I understand it from a business perspective, and it makes sense from their end. Just wish there were a way to select a preference!

By: Madison

Madison — Wed, 14 Oct 2009 18:59:47 +0000

As I don’t have a credit card, so, I have also linked my bank account with my PayPal personal account. It takes 2 to 3 days to withdraw the fund from PayPal to my bank account and while paying through my bank account, it occurs instantly. I own a debit card, but I just couldn’t link and confirm it to my PayPal account. Is there any way so that I could link my debit card with the same?

By: Anonymous

Anonymous — Fri, 09 Oct 2009 15:59:14 +0000

For all of their large business clients, PayPal processes all payments for a flat percentage rate fee – regardless of whether the buyer pays with a credit card, a bank account, or even their PayPal balance. A year or so ago that rate was ranging from 1.65-1.9%. This rate is guaranteed to PayPal’s business client, so it represents a fixed costs for them and a net income for PayPal. But anything PayPal can do to decrease credit card processing fees increases the net income generated by that “blended rate” fee, as PayPal calls it.

You’ll notice that the default mechanisms come in order of their cost:

Default #1: PayPal Balance (free to PayPal)
Default #2: Bank Account (ACH fees of maybe $0.10 per)
Default #3: Credit Card (merchant fees of 2-3%)

By: Stephen @ Financial Services

Stephen @ Financial Services — Fri, 09 Oct 2009 15:36:55 +0000

I think it’s a win-win solution for Paypal and it’s consumer base. For Paypal, they will be able to avoid the fee in processing credit cards. And for it’s users, we’ll save on finance charges and other fees associated with using a credit card. One of the reason why I use credit card especially on online purchases is because I am comfortable with it’s security features, which I think is one of the reason why there’s always a hike in it’s fees. Other Paypal features which are pretty annoying sometimes is another issue though

By: JoeTaxpayer

JoeTaxpayer — Fri, 09 Oct 2009 14:28:26 +0000

Yup. The default option is to pay with a pull from checking.
There seems to be no way to change this, only select the card each transaction. Each time, it’s an extra step you need to go through, pretty annoying.
They avoid the fee, and I’d miss the cashback reward on my card. For tiny transactions, I don’t bother. But when spending $100 or more I flip back to the card.

By: BRB

BRB — Thu, 08 Oct 2009 21:01:49 +0000

Paypal has had this message for the last few years. They don’t want you ever going to your credit card instead of paypal for a dispute and I assume that the less people pay with a cc the less likely they are to have this problem.