PayPal wants me to “add a bank account”, another funding source. Credit card isn't working. Why?

Question

This is the second time in the last couple of weeks that I'm seeing the following error from PayPal. (Note: I've deliberately hidden the name of the merchant at the top.)

"You cannot use this credit card for this transaction. Please use another funding source.

• You will need to add and confirm your bank account. Once your bank account has been added and confirmed, you can continue this payment. Add your bank account information below."

I've used PayPal successfully for years, primarily to make purchases on eBay, but I've also used it in the past for a few other non-eBay transactions such as shareware software purchases, a training course registration fee, etc. I've never disputed a PayPal payment or initiated a charge-back on my credit card.

What's particularly irritating is PayPal wants me to add my bank account to my PayPal account instead, if I want to complete the transaction. I specifically did not want to associate a bank account with my PayPal account, for privacy reasons.

I've never before had a problem paying by credit card, until these two recent occurrences. Why might this be happening? Who is PayPal trying to protect – me, or themselves?

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UPDATE: There's additional information available from PayPal that reads:

Funding Options

PayPal is constantly working to protect our members against fraud. We review every transaction before it is approved, and we may block a payment when we detect a potential risk.

Our reviews take into account every aspect of a transaction, including looking at both parties. These decisions help us maintain the integrity of our payments network in the same way as other payment processors: by declining transactions with an unacceptable level of risk.

While our fraud measures occasionally block a legitimate payment, to maintain overall security, we cannot overturn any decisions about an individual transaction.

If you decide to continue this transaction using a different funding source, please note that the associated risk levels have not been decreased.

Answer 1

I'm guessing that you've reached the value limit of a payment that can be made without linking your account to a bank account. While you want privacy, PayPal wants to not be a money launderer. You may need to seek an alternative way to pay for this if you're trying to be private about it.

Answer 2

Have you checked to make sure that your card isn't at the limit, or at risk of expiring soon? Maybe PayPal has a policy to reject credit cards with expiry dates that fall within their buyer/seller protection periods?

But to answer your question, no, I've never had this happen to me before.

Answer 3

It's always a good idea to check your credit history on a regular basis - try checking your credit score from one of the independent providers recently (like Equifax) ? Maybe that will offer a clue what PayPal is doing.

Answer 4

I'm pretty sure it's merchant-dependent. If a credit card transaction doesn't go through, PayPal will automatically charge your bank account. Some merchants may want that extra insurance.

Answer 5

I would guess that this is due to the card issuer, not Paypal. Credit card transactions are tagged with a code describing the type of purchase, and some issuers disallow certain types (such as gambling).

Answer 6

It's possible the recipient of the payment is not setup to receive funds form PayPal from a credit card, too.