Author Topic: What are the advantages of using a credit card with Paypal and how do I do it?  (Read 4186 times)

Fluffy*Duckee

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I have heard that if you are going to use Paypal, it is better to use a credit card behind your purchase, rather than your bank account.

How do I ensure that the sale will only be taken from credit card (I am bank account verified) and why is a credit card a better option?

*CountessA*

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Fluffy, here's some information from Westpac about resolving credit card problems when there's a transaction dispute. (Pdf file.)

As you can see, it addresses the issue of "goods not as described" as well as "goods not received".

There's a great deal of information on the ASIC website about the EFT Code of Conduct, specifically addressing your rights. Direct link to this information is here.

Quote
What is the Electronic Funds Transfer (EFT) Code?

The EFT Code is a code of practice which sets out rules about how electronic funds transfers should work. Businesses may choose whether to sign up to the Code. If they do, they must follow the Code in their dealings with you.

The Code sets out what the business must do, what your rights and responsibilities are and what happens if something goes wrong.

What types of electronic funds transfer services are covered?

The EFT Code is designed to cover all types of electronic funds transfers including:

    * getting money out of an ATM (automatic teller machine) or paying money into one
    * buying goods or services on EFTPOS (electronic funds transfer at point of sale)
    * buying goods or services with a credit card when you don’t need to sign for them

This means that credit card transactions over the internet and telephone are covered. However, if you pay in person and authorise the transaction with your signature, the EFT Code won’t apply. Other rules cover these transactions.

    * computer/mobile phone internet banking
    * telephone banking
    * transactions using stored value facilities such as prepaid phone cards.


Are there any electronic funds transfers not covered?

The EFT Code does not cover business accounts or biller accounts. Biller accounts are accounts maintained solely to record amounts owed or paid for non-financial goods or services supplied by the company (eg an electricity account).


What is in the EFT Code?

The EFT Code sets out rules about:

    * the information you must be given and when and how it is provided
    * what happens when things go wrong, including who is liable when there is an unauthorised transaction on your account
    * your responsibility to look after your PINs and passwords and keep them secret
    * procedures for making complaints
    * special rules to protect the users of stored value facilities
    * privacy
    * when institutions can contact you electronically rather than on paper.


Who has signed up to the EFT Code?

All banks, credit unions and building societies offering electronic banking services to retail customers subscribe to the EFT Code.

Issuers of payment facilities outside the financial services sector, including entities in the transit, toll-road, telecommunications and retail sectors, have not subscribed to the EFT Code to date, nor have most finance companies.

Businesses that have signed up to the EFT Code must tell you, in their contract with you, that they will comply with the EFT Code.

If you use PayPal, it's much, much better to fund your purchase from your credit (or debit) card than from your bank account, because in that way, the EFT Code of Conduct gives you redress if PayPal fails to do so in a dispute or claim where you should be entitled to that redress.

You should be aware that "When you make a payment, the money will first be taken from your PayPal account balance. If your balance cannot cover the full amount of your payment, the rest of the money can come from PayPal Credit products, your linked bank account, eCheque or your personal credit card. If you do not have a PayPal account, you must enter a valid credit card to complete your payment. Note: You may have the option to pay for your entire purchase using eCheque or PayPal Credit."

So - unless you take steps to remove any funds from your PayPal balance, you can't specify that the payment will be funded by your card. And that's a problem if you want the additional security of your card provider.

To make absolutely certain your purchase is funded from your card, you'll have to a) make sure your PayPal balance is 0.00, and then "choose your credit or debit card as your payment methods when you send a PayPal payment. Click the Change link when sending a payment."
"No man is an Iland, intire of it selfe; every man is ...a part of the maine; ...any mans death diminishes me, because I am involved in Mankinde"

*wheels*

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I'm not a seller, but aren't funds cleared faster to the seller's account when a paypal payment is funded via creditcard than from a savings account?

As a buyer, I prefer the added protection that a creditcard chargeback gives me if something goes wrong with the sale.

exislegirl

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I'm not a seller, but aren't funds cleared faster to the seller's account when a paypal payment is funded via creditcard than from a savings account?

As a buyer, I prefer the added protection that a creditcard chargeback gives me if something goes wrong with the sale.


Payments via PayPal, whether funded by credit card or bank account are received in the same time (immediately) if the person making the payment has a CC on file with PayPal. If the person making a payment doesn't have a CC on file, and is paying from a bank account... the payment becomes an echeque, and there is a delay in the transaction being finalized until the funds have been actually transferred from the bank account to PayPal.

 

*CountessA*

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Good point, Outofexisle - because that's not always clearly understood.

E-cheques occur when the buyer doesn't have a credit or debit card on file. In essence, the people who don't trust PayPal with their credit card (or who don't have a credit card and are using PayPal as a sort-of substitute for having a credit card in terms of paying for things online) are the ones whose payments will be processed as an e-cheque, which can take quite a whole to process.

Some sellers have mentioned e-cheques clearing reasonably quickly (within 3-4 days). Some have said it seems to take around 4-7 days. I've received e-cheque payments from a friend & client in the US (not on eBay - I'm not an eBay seller), and both times it took 9 days to clear, even though the funds were there in his bank account waiting, waiting, waiting... I'm so glad he decided to bite the bullet and get a card so he can pay me online through my merchant account. Much less fuss and very fast processing! I usually see the funds appear in my account within 24 hours, but I can instantly see in my account admin panel that the payment's been accepted at source.

"No man is an Iland, intire of it selfe; every man is ...a part of the maine; ...any mans death diminishes me, because I am involved in Mankinde"

llama

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So - unless you take steps to remove any funds from your PayPal balance, you can't specify that the payment will be funded by your card. And that's a problem if you want the additional security of your card provider.

The easy solution to this is to open 2 Paypal accounts.

Verify one as a "Personal Account" using your Bank Account. Verify the other one as a "Premier" Account using your credit card.

Always pay using the Premier Account, so that you are covered by your Credit Card.

Be paid (as a seller) to the Premier Account as well. Each time you get money in, transfer it to the personal account (which is fee-free for transfers).

When you get $150 in the Personal Account, transfer it out to your Bank Account.