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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, 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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3 Answers

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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♦ Nov 17 at 23:06
That seems like a valid assumption, based on the "Funding Options" clause you pasted above. – Mike Nov 19 at 22:09
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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♦ Nov 4 at 14:54
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I'm only suggesting this because I know you do it on a regular basis - have you checked your credit score from one of the independent providers recently (like Equifax - link text) ? Maybe that will offer a clue what PayPal is doing.

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