PayPal Funding Sources

paypal funding sources
paypal funding sources

PayPal allows you to make payments using a variety of funding sources including: your credit card, Visa or MasterCard debit card, transfer from your bank account, PayPal Smart Connect offered by GE Money bank, and eBay gift vouchers or similar redemption codes.

Your protection against undelivered or defective goods will vary depending on the funding source, the type of purchase, and the location of the purchase, so it is important that you review this page to understand how protections differ.

This page explains PayPal’s default funding sources, your ability to select a preferred funding source, and your funding source rights and remedies.

If you have multiple funding sources available, PayPal will fund your transaction as follows:

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Balance If you have a balance on your Account, PayPal will always use your balance to fund your payment.
Funding Sources If you do not have a balance or your balance is not sufficient to fund your entire transaction, PayPal will fund your transaction, or the remainder of your transaction, in the following order:

  • Balance (if any).
  • Instant Transfer from your bank account (if you have registered your bank account).
  • PayPal Smart Connect or PayPal Extras MasterCard.®
  • Credit card/debit card.
  • eCheque from your bank account (if you have registered your bank account).
Recurring Payments If you have a balance at the time the merchant processes your payment, PayPal will use your balance instead of your Preferred Funding Source.
Merchant Processing Delays In order for a merchant to receive a payment from your PayPal account, you must authorise the payment and the merchant must process the payment. Sometimes there is a delay in the time it takes for a merchant to process the payment. If you have selected a preferred funding source when you authorised the payment and at any time prior to the merchant processing the payment you have a balance in your account, PayPal will use your balance to fund the payment instead of your preferred funding source.

Selecting a Preferred Funding Source


In some, but not all instances, PayPal will allow you to change from the default funding source to a preferred funding source. If PayPal allows you to select a preferred funding source, and you take the steps necessary to select a preferred funding source, then the preferred funding source will apply instead of the default funding source. If you would like to select a preferred funding source, you may do so each time you send a payment or establish a recurring payment. You may select a preferred funding source by clicking the link on the payment confirmation page and selecting from your available funding sources.

If you have a balance in your account, we will require you to make your payments from that balance, except that we will allow you to select eCheque or PayPal Smart Connect as your preferred funding source instead of balance. If you have a balance and do not want to use it to fund your payment, you must withdraw your balance before initiating your payment.

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 on the understanding that you may have fewer avenues available for dispute resolution should the transaction turn out to be unsatisfactory.

  • 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 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 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.

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