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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.)

PayPal error image: "You cannot use a credit card for this transaction. Please use another funding source."

"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][4], 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?

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.

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    PayPal is trying to get people to link their card with their bank or apply for a PayPal credit card. They say it is to protect your identity! BOGUS! Don't do it!
    – user9789
    Commented Apr 14, 2013 at 0:50
  • The irritating thing is that once you've linked a bank account that will become the default source for all remittance thenceforth if you have no money in your Paypal account. You will have to select credit card every blasted time. It's so they can avoid the CC fees and pocket more of the take.
    – Spehro 'speff' Pefhany
    Commented Aug 25, 2015 at 16:59
  • @SpehroPefhany Precisely. I've had a few charges go to my bank account because I forgot to switch.
    – Chris W. Rea
    Commented Aug 25, 2015 at 17:59

8 Answers 8

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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.

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  • Interesting suggestion, but no - the purchase in question was less than previous purchases I had made before. On the other hand, the higher purchases were eBay purchases (and eBay owns PayPal) so perhaps they were more willing since they could "see" the other end of the transaction?
    – Chris W. Rea
    Commented Nov 17, 2009 at 23:06
  • That seems like a valid assumption, based on the "Funding Options" clause you pasted above.
    – Mike
    Commented Nov 19, 2009 at 22:09
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    It's a cumulative total. You will have to do it.
    – Spehro 'speff' Pefhany
    Commented Aug 25, 2015 at 16:57
  • Wanting your bank account details has nothing to do with money laundering concerns.
    – Andy
    Commented Aug 15, 2017 at 0:17
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Visit paypalblows.org to find out more reasons. PayPal wants your bank account info on file before they allow you to take payment. So setup a bank account strictly for this service, and if they give you trouble or suspend your account, simply never use them again and tell others of your experience. I think the only reason why PayPal wants a bank account is so they can dip into it and take chargeback money.

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8

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.

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  • Good suggestions, but no -- my credit card is neither at the limit, nor is it expiring soon. In fact, I used it for another PayPal transaction quite recently.
    – Chris W. Rea
    Commented Nov 4, 2009 at 14:54
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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).

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

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    Definitely possible, but it would be a sign that the merchant is using a personal Paypal account, not a commercial one, and miscategorizing the payment as person-to-person rather than a sale. Could impact consumer protections in case the item is never sent, because the merchant can use the category to claim the Paypal was a "gift" and not a payment for an item.
    – Ben Voigt
    Commented Jun 30, 2016 at 16:32
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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.

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I've used PayPal for my business for a long time.

Sometimes PayPal doesn't trust credit cards. Debit or direct bank transfer are reliable. There is also a charge for using a credit card but I don't think that is the reason.

You may be trying to purchase a high value item. That would be a possible reason why PayPal allowed you to use credit cards in the past, but will not allow you to do so now, for these particular transactions.

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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.

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