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Have you ever wondered how PayPal Funding Sources work and what's the order in which they're taken?
If so - read on:
The funding sources available to you when you make a payment by PayPal will depend on whether or not:
If you have enough money in your PayPal account to cover a payment – then that money will always be used first unless payment is made by eCheck.
PayPal balance payments are instant.
An eCheck is a payment made from your bank account using Direct Debit.
So if you have confirmed your bank account with PayPal, but don’t have a credit or debit card, you can make a payment by eCheck.
An eCheck is similar to a paper cheque. Funds are deducted from your bank account by PayPal and then paid to the seller’s PayPal account. This process usually takes about 7-9 working days (so probably 10-14 days in total). An eCheck payment will remain Uncleared until the money is actually deposited in the seller’s PayPal account. Most sellers will not send out goods until the eCheck has cleared, in case the transfer fails for some reason.
Please remember that the seller does not receive cleared funds as soon as the money has been taken from your bank account.
An Instant Bank Transfer is a payment made from your bank account using Direct Debit when you also have a debit or credit card attached to your PayPal account. So it is like an eCheck, but in this case the payment is instant and doesn’t have to clear, because if the Direct Debit payment fails then your debit or credit card is used as a backup funding source.
For this reason, when you make an IBT payment, you cannot remove the credit or debit card used as the Back-Up Source from your PayPal account until the money has been deducted from your bank account.
Remember it will take PayPal several days to actually take funds from your bank account even though PayPal will give the money to your seller straight away.
When you’ve set up Direct Debit with PayPal and have added a credit or debit card to your PayPal account, IBT is the default funding source when you make a payment. So if you want to use your card you will have to select it manually.
If you don’t have enough funds for the payment and you haven’t confirmed your bank account then payment will be funded by the card you’ve nominated as Primary, though you can change that to another card when you pay.
If the funding source is defaulting to IBT (i.e. you have confirmed your bank account) you can change the funding source from IBT to any of the cards you have added to your PayPal account at the point you make a payment.
Click the More Funding Options link to change the funding source:
This then shows all the available funding options:
Select the relevant card and press Continue.
Ignore any messages from PayPal encouraging you to use your bank account.
It is safer for you to use a credit card in case the goods don’t arrive or there is a problem when they do, because your card issuer may “charge-back” the payment for you.
But always check with your credit card issuer what protection you will have because this varies from company to company. Also, check with your bank if you’re using a debit card because some banks offer protection for debit card payments.
Your screen will now show the card as the funding source:
If you would like further information of how you can fund ALL transactions direct by credit / debit card – please see the Buying Section in this eBay Guide:
How to Make PayPal Work for You (UK)
Sometimes PayPal will block a funding source that their system has flagged as high-risk:
https://www.paypal.com/my/cgi-bin/webscr?cmd=p/gen/ua/policy_payments-outside#payments-policy
3.4 Funding Source Limitations. In order to manage risk, PayPal may limit the Funding Sources available for a transaction. If we limit the Funding Sources, we will alert you that there is a higher-than-normal level of risk associated with the payment. Such a notice does not mean that either party to the transaction is acting in a dishonest or fraudulent manner. It means there may be a higher-than-normal level of risk associated with the transaction. You may choose to continue with the transaction with the understanding that you may have fewer avenues available for dispute resolution should the transaction turn out to be unsatisfactory.
So if a funding source does not appear this policy could explain why.
_______________________________________________________________________________________________________________________________________
The images posted here are limited in size and resolution by eBay.
If you would like to see the images in a larger, more clear format, please visit my on-line Help Page:
http://myweb.tiscali.co.uk/ajcardiac/PayPal%20Funding%20Sources.htm
_______________________________________________________________________________________________________________________________________
If you have a problem with PayPal that isn’t covered in this Guide, then take a look here:
About Me: ajcardiac3
_______________________________________________________________________________________________________________________________________
If so - read on:
The funding sources available to you when you make a payment by PayPal will depend on whether or not:
- You have sufficient money already in your PayPal account (i.e. a PayPal balance)
- You have added a bank account and confirmed it by completing bank funding
- You have a valid credit or debit card attached to your PayPal account
- PayPal Balance
- Instant Bank Transfer
- PayPal Credit
- Debit Card
- Credit Card
- eCheck
PayPal Balance
If you have enough money in your PayPal account to cover a payment – then that money will always be used first unless payment is made by eCheck.
PayPal balance payments are instant.
eCheck
An eCheck is a payment made from your bank account using Direct Debit.
So if you have confirmed your bank account with PayPal, but don’t have a credit or debit card, you can make a payment by eCheck.
An eCheck is similar to a paper cheque. Funds are deducted from your bank account by PayPal and then paid to the seller’s PayPal account. This process usually takes about 7-9 working days (so probably 10-14 days in total). An eCheck payment will remain Uncleared until the money is actually deposited in the seller’s PayPal account. Most sellers will not send out goods until the eCheck has cleared, in case the transfer fails for some reason.
Please remember that the seller does not receive cleared funds as soon as the money has been taken from your bank account.
Instant Bank Transfer
An Instant Bank Transfer is a payment made from your bank account using Direct Debit when you also have a debit or credit card attached to your PayPal account. So it is like an eCheck, but in this case the payment is instant and doesn’t have to clear, because if the Direct Debit payment fails then your debit or credit card is used as a backup funding source.
For this reason, when you make an IBT payment, you cannot remove the credit or debit card used as the Back-Up Source from your PayPal account until the money has been deducted from your bank account.
Remember it will take PayPal several days to actually take funds from your bank account even though PayPal will give the money to your seller straight away.
When you’ve set up Direct Debit with PayPal and have added a credit or debit card to your PayPal account, IBT is the default funding source when you make a payment. So if you want to use your card you will have to select it manually.
Credit or Debit Card
If you don’t have enough funds for the payment and you haven’t confirmed your bank account then payment will be funded by the card you’ve nominated as Primary, though you can change that to another card when you pay.
If the funding source is defaulting to IBT (i.e. you have confirmed your bank account) you can change the funding source from IBT to any of the cards you have added to your PayPal account at the point you make a payment.
Click the More Funding Options link to change the funding source:
This then shows all the available funding options:
Select the relevant card and press Continue.
Ignore any messages from PayPal encouraging you to use your bank account.
It is safer for you to use a credit card in case the goods don’t arrive or there is a problem when they do, because your card issuer may “charge-back” the payment for you.
But always check with your credit card issuer what protection you will have because this varies from company to company. Also, check with your bank if you’re using a debit card because some banks offer protection for debit card payments.
Your screen will now show the card as the funding source:
Summary
- If you have enough existing funds in your PayPal account to cover a payment, then those funds will be used instead of IBT or your debit or credit card, and you can’t change that. But you will be able to make the whole of the payment by eCheck and not use the funds already in your PayPal account.
- If your account balance is not enough for the payment, then what funds there are will be used and the rest needed to make up the payment will be funded by IBT or your debit or credit card.
But you will be able to make the whole of the payment by eCheck and not use the funds already in your PayPal account.
- If you have no existing funds, then all of the payment will be funded by eCheck, IBT or your card.
If you would like further information of how you can fund ALL transactions direct by credit / debit card – please see the Buying Section in this eBay Guide:
How to Make PayPal Work for You (UK)
Sometimes PayPal will block a funding source that their system has flagged as high-risk:
https://www.paypal.com/my/cgi-bin/webscr?cmd=p/gen/ua/policy_payments-outside#payments-policy
3.4 Funding Source Limitations. In order to manage risk, PayPal may limit the Funding Sources available for a transaction. If we limit the Funding Sources, we will alert you that there is a higher-than-normal level of risk associated with the payment. Such a notice does not mean that either party to the transaction is acting in a dishonest or fraudulent manner. It means there may be a higher-than-normal level of risk associated with the transaction. You may choose to continue with the transaction with the understanding that you may have fewer avenues available for dispute resolution should the transaction turn out to be unsatisfactory.
So if a funding source does not appear this policy could explain why.
_______________________________________________________________________________________________________________________________________
The images posted here are limited in size and resolution by eBay.
If you would like to see the images in a larger, more clear format, please visit my on-line Help Page:
http://myweb.tiscali.co.uk/ajcardiac/PayPal%20Funding%20Sources.htm
_______________________________________________________________________________________________________________________________________
If you have a problem with PayPal that isn’t covered in this Guide, then take a look here:
About Me: ajcardiac3
_______________________________________________________________________________________________________________________________________
Guide created: 07-05-2008 (updated 10-06-2008)
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