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Getting PayPal To Charge Your Visa/Mastercard Debit Card As A Credit Card


If you buy and sell online PayPal is a necessary evil. In spite of all of its evil practices, you really have no choice but to use it - especially if you don't want to divulge your personal financial information to the party that you're buying from or selling to. I've always had a section on this site with notes about dealing with certain aspects of PayPal. I put it up for my reference, but I figured I'd leave it public in case the information is useful to others as well. What I'm going to discuss today is too important to hide away on that page.

If you don't have money in your PayPal account, PayPal will default to grabbing it from your bank account via an "Instant Transfer". If you have a Visa/Mastercard debit card connected to your bank account, it is for YOUR benefit to get PayPal to use it - as a credit card, not as a debit card - instead of doing a bank transfer. I have two big reasons for forcing PayPal to use my bank card as a Visa credit card:
  1. PayPal forces you to have a debit/credit card on file with them in order to do "instant transfers", even though they clearly don't want to actually use it (because it would cost them money per transaction). If they're gonna force me to give them the card info in order to send money instantly, then I'm gonna force them to use that card!
  2. I get "Even More Rewards" points from my bank for every Visa card purchase of $20 or more. I don't get a damn thing with bank transfers, even though the money is coming from the same source.
Unfortunately, PayPal doesn't make it very intuitive to fund the transaction in ways that DON'T serve their bottom line. They have designed their site in a way which inhibits transactions using credit cards and ensnares people into making unintentional bank transfers. A bright orange button labeled "Send Money" is placed prominently near the top of the payment page, while a small ordinary link buried below must be clicked to fund payments with your credit card. Click the orange button first and it's too late... Gotcha! Not even a warning. If you find this infuriating like I do, follow these instructions to prevent PayPal's greedy digital hands from getting into your bank account instead of your Credit Card - where they actually have to earn their money!

After you add the items to your cart, and go through the log in, you will be presented with the "Review Your Payment" screen:

As you can see, PayPal defaults to doing a bank transfer (aka "Instant Transfer"). You need to click on the small nondescript "Change" link at the bottom of the Payment Method section to change your payment source. PayPal counts on you forgetting to always do this, as they do not allow you to globally set your default payment source. If you want a little help in remembering to change this option for every transaction, and you're using the Firefox or Seamonkey browsers, get yourself the Greasemonkey extension (there's a modified version for Seamonkey users), and then get the PayPal Instant Transfer Zapper Greasemonkey script. This script will pop up a little box alerting you to the fact that PayPal is set to use your bank account to fund the transaction. Clicking the OK button has the same effect as clicking on that little "Change" link, only the button puts itself right in your face so you don't forget to make the change.

Once you click on the "Change" link, or the OK button if using the Zapper script, you will be taken to the Funding Options screen:

Depending on whether you're doing a PayPal shopping cart transaction (as is being done to generate the above page), a PayPal "send money" transaction, an eBay Checkout transaction, or some other type of transaction, the page above might look slightly different. In some cases, PayPal tries to trick you by changing the labels of the buttons at the bottom, and changing the colors of them: making the "bad" one bright yellow and the "good" one off-white. They may even put up some BS about why bank transfers are "good". Be aware of all of this crap and make sure you have it set to use the Credit/Debit Card.

Once you set it to Credit/Debit Card, and click "Continue", you'll be taken back to the "Review Your Payment" screen. This is as far as the PayPal Instant Transfer Zapper script will currently help you. In the past that was all the help you needed, but as I learned yesterday, PayPal has gotten FAR more insidious in their schemes to trick you into making them pay as little as possible for your transaction, while raking in as much in fees as possible.

After making the change from bank transfer to credit/debit card, you'll be back on the "Review Your Payment" screen, which should look something like this:

WHAT THE FLUFF!!! Why does it say "ATM Debit" as the payment method? Every PayPal transaction I've ever done in the past decade has said "Visa" there. Now all of a sudden it says "ATM Debit". This change in tactics by PayPal actually got me charged $1.50 by my bank. You see, when any merchant (PayPal, online store, offline store, etc.) processes a Visa/Mastercard debit card (aka "check card") as a Visa/Mastercard "credit" card, there will not be a fee to the buyer. (You have a really crappy bank if you're charged a fee.) If the transaction is done in a physical environment, you will be required to put your signature into the checkout terminal, or onto a receipt if the merchant is old school. If a merchant processes a Visa/Mastercard debit card as a "DEBIT" card, there WILL be a fee to the buyer; and if the transaction is done in a physical environment, you will be required to enter your PIN into the checkout terminal. The fee is usually called an "ATM Service Charge" and will be what ever amount your bank charges you when you use your card at the ATM of another financial institution. You can find the amount in your bank's "Schedule of Fees and Services":
ATM/VISA Check Card Transactions
Point-of-Sale Transaction with PIN - $1.50
Point-of-Sale Transaction with Signature - No charge
PayPal was being down and dirty before by defaulting to bank transfers and not allowing you to change your payment method permanently and globally in your preferences, but this is a new low, even for PayPal. What I don't understand is how they can process the card as a "DEBIT" card without having my PIN. Isn't that required in order to do that type of transaction?

Anyway, in order to change the payment method from "ATM Debit" to "Visa" or "Mastercard", you will need to use the newly-created, almost hidden "Funding Sources" link near the top of the page. This is the type of option that should have been on the Funding Options page right next to the check box for Credit/Debit Card. But, of course, that would make too much sense for the consumer, and would cost PayPal precious money in fees to Visa and Mastercard, which they don't have to pay if you let them do it as a "debit" card transaction.

EBAY CHECKOUT NOTE: During the eBay checkout process, the location of the almost hidden "Funding Sources" link is in a slightly different place.

SEND MONEY NOTE: On the PayPal website, when you use the Send Money feature, you will want to look for a link entitled "View PayPal policies" at the top of the page.

When you click on that link, a little box appears over the page:

EBAY CHECKOUT NOTE: During the eBay checkout process, when you click on the "Funding Sources" link, instead of a little box popping up over the page, you are taken to a new VERY LONG webpage. You have to scroll down this VERY LONG page full of text and more text to find the option to change Debit to Visa/Mastercard. Did I mention that the page is VERY LONG?

Click the box next to "Use the Visa network" (or "Use the Mastercard network"), and then click on the Submit button. The "Review Your Payment" page will reload and will be updated as such:

FINALLY PayPal is going to charge the card as a credit card! We sure had to jump through enough hoops to get to this point, didn't we? Now click on the "Pay Now" or "Send Money" or other similarly-named button to complete your transaction.

[UPDATE, 3/12/2011] - The information above does not apply to PayPal's new checkout procedure, where the customer isn't given an option, even one that's nearly-hidden, to have PayPal bill their card as "credit". Most interestingly, I saved the checkout html page, and when I looked over the html code, I discovered that the coding to change to Visa IS there. The little "PayPal policies on funding sources" box should appear over the page, but there is no link to trigger its appearance. The "PayPal policies" link that is there takes you to another page (which has no options to change NYCE/Debit to Visa), instead of showing the box over the page. As a result, only bank transfer and "ATM" charge options are presented. So far, I've only experienced this new PayPal checkout on EonEntertainment.com and Highspots.com. Though, I have this bad feeling that I'm going to see it on more sites. I'm telling you, PayPal REALLY hates their customers.

[UPDATE, 3/28/2011] - Using Visa's Report A Merchant Violation form, I reported PayPal for violating Visa policy by advertising that they accept Visa, but not allowing any Visa cards to be processed as "credit". Although I never heard back from Visa, apparently it worked because...

[UPDATE, 4/11/2011] - Now with the new checkout procedure, after going through Step 1 (changing from the default "instant transfer" to credit/debit card), you are now shown text at the top of the page which includes a "Funding Sources" link so you can change debit to credit. Clicking on that link puts the little "PayPal policies on funding sources" box over the page with the options to change NYCE/Debit to Visa or Mastercard, and after you make the change, the page reloads to reflect the change.

(The source for the information used in Step #2 is this PayPal Community forum thread.)

[I'd like to give a big THANK YOU to Consumerist.com for covering this article on their website on May 25, 2010 (back when I had it as a blog post and not as a html page)). Thanks guys for helping me to spread the word.]