PayPal Discourages Use of Credit Cards

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PayPal Discourages Use of Credit Cards

Posted by efolgate 855 days ago, popular 854 days ago (http://moneysmartlife.com)
Category: Personal Finance | Tags: credit card payment paypal

Paypal is discouraging users to use credit cards as their funding source. What's the reason for this?

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robert11 855 days ago

Hard to tell if this is a move to help "protect" PayPal users by preventing credit card numbers from exposure and thus making PayPal seem like their watching out for the little guys. Or this could be a sign that PayPal has to pay fees to process credit cards and needs to reduce costs.

amabaie 855 days ago

They might be protecting themselves from the whole world of overextended credit.

jonathan 855 days ago

Paypal pays credit card fees if you fund with a credit card, this cuts in to their margin, bank drafts are much cheaper (and therefor more profitable) for them.

StephenDraper 854 days ago

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 :)

furball4 854 days ago

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 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.

PhilipCohen 854 days ago

If PayPal has to get the money from a credit card they have to pay the same fee as any other "merchant" in the range of 0.9% to 2.9% (probably 0.9%, or maybe less, for the amount of business they would be doing); if they take the money directly from a bank account the fee is negligible and they can then charge their "merchant" credit card type fees. But I have no intention of ever letting them get direct debit access to my bank account; via my credit card I have another level of security if I ever have a problem with the "clunky" PayPal system. Let's face it, the eBay Marketplace is going down the toilet and the "Ho" has to try to squeeze some additional revenue from somewhere ...

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