Paypal vs. Credit Card: Which is better to use?

James Ryan Jonas

If you still need to add a valid credit card in your PayPal Philippines account, which then would be better to use when purchasing online: your Paypal account or your credit card?

PayPal Philippines account holders find themselves in this dilemma after discovering that for them to fully use their PayPal account — including ability to withdraw and send unlimited amount — they must still attach a valid credit card.

If this is the case, isn’t it cheaper, easier, and better to simply use a credit card to make an online purchase? Well, not necessarily. Below we list the Pros and Cons of using a send-only PayPal Philippines account as opposed to making a direct online purchase with your credit card.

PROs: Why it is better to use Paypal than credit card

  • Easier to buy from eBay and other PayPal-only sellers

A lot of eBay sellers prefer to get paid only by PayPal so with your PayPal Philippines account, it’s now easier to buy clothes, accessories, books or gadgets in eBay.

  • Easier to get chargeback when scammed

PayPal is notorious for chargebacks (refunds) but this also works to your advantage in case you were scammed (i.e., you did not receive the product your paid for, etc.). Just file a Dispute Complaint in PayPal and provide the details of the transaction. If your complaint is valid, it takes a few days before your funds will be credited back to your account. Some credit card companies, in contrast, do not offer refunds even if you were scammed. For some that do, it usually takes days or weeks before you can get your money back.

  • Less risk of having your credit card hacked

Because you use your credit card in conjunction with your PayPal account, you lessen the risk of having your credit card hacked. Compare this to directly making a purchase with your credit card, where you open up all your card and personal details to the seller.

CONs: Why credit card is better to use than Paypal

  • No credit card, no PayPal account

Your PayPal Philippines account is useless if you don’t have a valid credit card. And the credit card should be in your name too or in the name of the person owning the PayPal account. You can’t use your mom’s or somebody else’s credit card details in your own PayPal account.

  • More charges, more expensive

You pay more when you use your PayPal account to purchase online because of various Paypal fees. If the product is priced in a different currency, you sometimes will pay more due to currency exchange diferences. This is because PayPal first converts the price to dollars using their own exchange rate, then charges this dollar amount to your credit card. If you think the charges would be way more than what you would incur had you used your credit card, better not to use PayPal to purchase online.

  • Easier customer support

If you have issues with your account or credit card transactions, you can easily contact your credit card company by phone. Paypal issues, however, are addressed via online Helpdesk support but responses usually take several hours or days. In some cases, you will have to contact Paypal’s office abroad. This entails additional cost on your part.

Anything else you can think of? Join the discussion in the “Finally, PayPal Philippines is here!” thread in the PMT Forum.

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James Ryan Jonas teaches business management, investments, and entrepreneurship at the University of the Philippines (UP). He is also the Executive Director of UP Provident Fund Inc., managing and investing P3.2 Billion ($56.4 Million) worth of retirement funds on behalf of thousands of UP employees.