PayPal Funding Sources

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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:
  1. You have sufficient money already in your PayPal account (i.e. a PayPal balance)
  2. You have added a bank account and confirmed it by completing bank funding
  3. You have a valid credit or debit card attached to your PayPal account

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 eCheque.

PayPal balance payments are instant.


An eCheque 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 eCheque.

An eCheque 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 takes about 7-8 working days (so probably 10-12 days in total). An eCheque 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 eCheque 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 eCheque, 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:


  • 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 eCheque 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 eCheque 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 eCheque, 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:

Choice of Funding Sources. PayPal reserves the right to limit an account-holder's choice of funding sources for any individual payment based on analysis performed through proprietary risk modeling systems. If PayPal decides to limit funding source choices, the account holder may have fewer avenues available for dispute resolution should the transaction turn out to be unsatisfactory. The account holder will be alerted to the higher-than-normal level of risk associated with the payment. If PayPal decides to limit funding source choices, this is not an indication that either party in the transaction is acting in a dishonest or fraudulent manner. It is merely an indication that the combination of variables in the transaction has alerted PayPal that the potential for payment repudiation is unacceptable. The account-holder can choose to continue with the transaction using the available funding sources (if any), with the understanding that the account-holder may be accepting an additional level of transactional risk, or can cancel the transaction before it is completed. For more information about protecting yourself from the risks associated with online transactions, please visit PayPal's Security Centre.

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:

If you have a problem with PayPal that isn’t covered in this Guide, then take a look here:

About Me: ajcardiac3

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