Let's get clarity on this, PayPal, and Chargeback

I’m thinking of moving to Monzo.

I have a Visa Debit currently and honestly I’ve no idea how it works there - Monzo is Mastercard so hence I ask

Let’s say I ordered £15 of jelly babies from a seller online and paid via PayPal, I never receive said jelly babies and the seller disappears.

Now I didn’t use PayPal Balance, I didn’t enlist the help of their begrudgingly shit e-cheque facility, I paid outright via my imaginary Monzo Mastercard.

How do chargebacks work? There is a clear transaction here, for 1 amount on the Monzo app.

What do you think?

In your scenario it’s nothing to do with Monzo. This came up recently.

Your payment goes Monzo > PayPal > Jelly bean seller

However short that middle pause is, it’s there. Monzo has done as requested so your fight is with PayPal.


Hey @Revels hope you’re well!

Irrespective of the short hop-skip-pay the money took to the jelly bean seller. I am sure that according to CAB and MSE, that as long as it is not part payment on PayPal balance or anything like that, money goes straight to the seller of my favourite, adored hypothetical gelatin based goods, then it’s alright.

Hence why I asked here. It’d be good to get a ton of varied opinions here preferably with sources, so I can ascertain an official stance.

Nevertheless, cheers for your response, perhaps you could point me in the right direction.

You did not send the money directly to the seller, that’s the key difference. You said to Monzo, “Please top up my PayPal account” and they did. You also said to PayPal, “Please pay for the jellybeans”, this is all wrapped up in the tap of one button, but the key is PayPal are the intermediary.


Wait so consequently this evokes the question, why are CAB and MSE advising the opposite?!

Hold on, sorry @revels if I’m being thick but, surely paying for an item through paypal as a proxy vs topping up and THEN paying for it are vastly different things.

They’re the same thing. You’re paying PayPal. What you do with it after that is between you and them.

As Dan said in the post I quoted, this can be a reason to avoid PayPal.

But I have found PayPal very very rarely agree with the seller, they are very buyer biased. If you complain, you usually get the money back. Which is why a lot of sellers don’t like PayPal.


Yep, in fact it is because of this that I will often choose to use PayPal over just my card directly. I’ve found PayPal’s support and claims process far superior (and biased towards the purchaser) than trying to request a chargeback from a bank.


If you paid a merchant via PayPal, I think your first point of call is to PayPal who should refund it.

Monzo aren’t great with chargebacks though and the process is very long and drawn out. Monzo has it’s benefits, but their chargeback process certainly isn’t one of them. Almost any other bank would refund you the money once they’re satisfied with your version of events, however Monzo makes you wait the 3 months+ for the whole matter to resolve in the background.

I don’t agree with you on this one. If he had topped up his PayPal balance with the amount prior to the transaction, then sure, but what’s more likely happened here is that PayPal is the payment processor for the transaction. It’s like categorising every Stripe payment as a payment to Stripe and not to the merchant. Despite how the transaction appears, the merchant is not PayPal.

It sadly doesnt really matter that you consider it like stripe, its not like stripe even though some may wrongly see it that way and its understandable some would be confused but it has been this way forever.
MSE actually warns your not normally covered for chargebacks when using paypal, they have a workaround that can cause banks to process it but its not a right and its more like a quirk.

To illustrate how unlike stripe it is legally, if a place uses stripe and you use a credit card you get section 75 protection, you do NOT get that when using paypal as a middleman, just like how if you use a curve card between the merchant and yourself you lose section 75 protection as well.


Whilst it is clear that PayPal as middleman breaks section 75 it doesn’t seem as clear with chargeback. There are multiple sources which suggest chargeback may be used when PayPal is in the middle. For example, this article from UK Finance


Ultimately though if I really wanted clarification on this I’d try getting clarification directly from MasterCard since they define the rules/expectations.

Yeah I totally agree with you on this. I’d contact MasterCard and that’d be first port of call. Genuinely sucks, that there’s no clear guidance, it’s luck of the draw

Have you ever complained to PayPal as either a buyer or seller?

They are ruthless! When I used to have an eBay shop years ago, I didn’t even bother to fight things in the end. You can have all the proof of postage, delivery, condition of item or anything else and they still find in the buyers favour.

It’s one of the reasons I’m happy to use PayPal as a buyer. I’ve never had to do a normal chargeback via my bank but from what I’ve read, it’s not a quick process, so whether the real liability really is with my bank or PayPal, I’d try the latter first.


I remember there being something fairly recently that Martin Lewis explained regarding using PayPal or credit cards (as an example), whereby you near enough forfeit Section 75 of the Consumer Credit Act 1974 when using PayPal to make purchases because they’re an intermediary who processes the payment for you and have their own policies on any disputes - I also agree with the above comments that PayPal seem pretty biased towards the consumer rather than the merchant in most cases.

If you’re looking for clarity on MasterCard’s chargeback process, it’s not really any different to Visa, meaning the banks and building society’s who use those services have a very similar initiation process. The only difference is whether the argument put forward by the consumer and the merchant (should the merchant challenge the chargeback) meets the bank or the building society’s policy, as well as their own timescales for a resolution and whether they choose to apply the charge incurred for raising a chargeback to the consumer (in cases where the merchant fights back and the bank agrees).

I’ve never used Monzo’s chargeback process as yet, but I believe you complete a form when disputing a transaction on the Monzo app and upload any evidence if applicable, then the rest is taken care of over the course of, if I remember right, 14 days.

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I avoid PayPal like the plague, even as a buyer they fudged me over, so will always pay by card if offered or not bother with the store


There are two major scenarios with PayPal transactions, which causes some confusion:

You pay without being logged into a PayPal account
In this case PayPal are acting as a normal card payment processor, and chargeback rights apply as normal (Section 75 also, for credit card purchases)

You pay while logged into your PayPal account
In this case between your account and PayPal you normally have an “account funding transaction” (topping up your PayPal balance). Normal chargeback rights do not apply - they only go as far as the point the funds were credited to your PayPal balance (before being immediately debited again)

Now, in practice PayPal do not contest a lot of chargebacks they could theoretically win even in the second case (I think the reason for this is that their systems seem to be inconsistent about properly flagging them as account funding). However, they will almost always terminate your account and ban you from opening another if you raise a chargeback against them for a transaction made while logged into a PayPal account.

Similar considerations apply if you pay PayPal via Direct Debit, for example (also, if you do so, and this is for a payment to a non-GBP merchant, expect them to sting you on the exchange rate)


Interesting and important rider there. When Paypal ban people, they like to do it for life and for everyone in their household.

I like to fund Paypal purchases from my bank account because it counts as a direct debit since the bank requires you to have a couple to qualify for your monthly bonus.

I’d assumed I could use chargeback if Paypal didn’t cough up, but it seems that would have been a costly mistake.

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