Why Do PayPal Payments Fail?

Zero Balance
A zero balance is the fastest way to have a payment rejected on PayPal. If you make the payment online, your balance is shown before you hit "Submit," so you know if there are enough funds available. You will get an instant failure if you attempt the transaction. The same goes for purchases using the PayPal debit card; if you don't have enough to cover it, the payment is not authorized.
No Backup Funding
When using the PayPal debit card to make purchases, you have the option to add backup funding. This protects you in the event there are not enough funds available in PayPal. The money is deducted from your bank account or debit/credit card, even when the balance shows "Zero." Click "Profile" and go to "My Money." Under "Debit and Credit Cards," click "Update." Click "Edit" to add a backup funding source.
Returned Check
If you have a backup funding source set up and the transaction fails, the e-check may have bounced. PayPal sends an electronic check to your bank account, and it takes 3 to 4 days for it to clear. When it is returned, PayPal takes the funds from your PayPal balance, if possible. You'll end up with a negative balance if you don't have enough in PayPal to cover the bounced check.
Negative Balance
Backup funding sources fail if you attempt to use the "Cash Back" option when making a purchase. In order to get cash back, your PayPal balance must be high enough to cover it. The only other time a funding source fails is if your PayPal account is negative, or the backup account is canceled.
Spending Limits
PayPal imposes limits on sending and receiving money. You can place certain limits for online spending, and limits for debit card use. For example, as of the date of publication, you can withdraw up to $400 daily from an ATM machine, and spend up to $1,000 a day using the PayPal MasterCard. You must verify one of your accounts and enter your Social Security number to receive a limit increase. Click "View Limits" on the "My Account" page to see the limits and begin the verification process.