Skip to content

Never Use PayPal for These 5 Purchases, Financial Experts Say

The popular payment service may not be the best option in all situations.

Anyone who's done enough shopping online has come across PayPal as a payment option for their purchases. The widely available service can work as an alternative to credit cards when it comes time to check out—which can be especially handy when you don't want to hand over your sensitive information. But even though it can make e-commerce that much more convenient, there are still some situations where it might not be the best option. Read on to see which purchases you should never use PayPal for.

READ THIS NEXT: Always Use Cash for These 5 Purchases, Financial Experts Say.

Digital goods and downloads


The items we purchase online aren't always necessarily physical objects. But if you're buying a digital product or download, experts say you might be better off using a different form of payment than PayPal.

"These transactions, often involving software, e-books, or in-game items, can be tricky to verify, and scammers are known to exploit this fact," says Branson Knowles, head of U.S. digital banking at Top Mobile Banks. "PayPal's policies on digital goods are not as robust as those for physical items, and you may find yourself in a precarious position if you need to dispute a transaction."

Citing a personal example, Knowles tells Best Life he once purchased a software license key that turned out to be invalid. "Despite my efforts, PayPal couldn't resolve the issue in my favor," he says.

Paying strangers with the "Friends & Family" option

Close up of a person holding and using an iPhone

Smaller business owners and online sellers will often default to PayPal as their go-to payment option thanks to its relative ease of use and how it can reduce costly fees associated with credit card processing. But according to Dustin Sandlin, a member of the Association of Certified Fraud Examiners and technical support expert for, it's vital to be mindful of how you send money through the app to these types of vendors.

"When you choose to send money using the 'Goods & Services' option, PayPal offers purchase protection so that if something goes wrong or you never receive the service or item, you still have the option of disputing the charges with PayPal," he explains. "But if you pay using the 'Friends & Family' option, that transaction is final and cannot be reversed for any reason."

READ THIS NEXT: Never Use Your Debit Card for These 6 Purchases, According to Financial Experts.

Tickets and collectibles


The internet has long been a marketplace for rare memorabilia and second-hand tickets to the hottest shows in town. However, it's only relatively recently that systems have been established that make buying those items more secure. And if you're using PayPal in these types of payment transactions, you could be leaving yourself exposed to risk.

"When it comes to high-risk items such as event tickets and collectibles, it's best to proceed with caution," says Knowles. "Counterfeit items are prevalent in these markets, and while PayPal does offer some protection, the process of resolving disputes can be lengthy and arduous. Additionally, high-value items may require additional fees for shipping and insurance, which can be difficult to recover if the transaction goes south."

Bill autopay

man sitting at a desk by a window at home, paying bills. He is looking through a stack of envelopes and has his laptop computer in front of him.

There's no question that bill autopay can make it much easier to stay on top of your regular expenses. It can even be a great way to organize your budget and stay on top of your money—unless you're using PayPal as your form of payment.

"If you sign up for multiple subscriptions or billing arrangements with PayPal, it will only say 'PayPal' charged you when the bill hits your credit or bank card," says Sandlin. "This can make it a bit difficult to easily figure out which website or service really charged you."

For more financial advice delivered straight to your inbox, sign up for our daily newsletter.

International transactions


Shopping online can seriously expand your buying options as it puts the world at your fingertips. But before you pass on the opportunity to pay for an international purchase with your credit card, you might want to think twice.

"While PayPal can be a convenient method for buying goods from abroad, the associated currency conversion fees can be exorbitant, especially for larger purchases," cautions Knowles. "Moreover, if you need to resolve a dispute, the process may become more complicated when dealing with sellers from other countries."

Knowles describes a situation he experienced a few years ago in which he bought a handcrafted piece of pottery from a small European online boutique—only to find it was severely damaged when it finally arrived.

"Navigating the international dispute process turned out to be a nightmare, taking months to reach a resolution. And the shipping costs to return the item were nearly as much as the pottery itself," he says.

Best Life offers the most up-to-date financial information from top experts and the latest news and research, but our content is not meant to be a substitute for professional guidance. When it comes to the money you're spending, saving, or investing, always consult your financial advisor directly.

Zachary Mack
Zach is a freelance writer specializing in beer, wine, food, spirits, and travel. He is based in Manhattan. Read more
Filed Under