PayPal is expanding its online credit offering by introducing a physical card for in-store use. The card, announced on June 3, extends the functionality of PayPal’s popular “PayPal Credit” virtual line by allowing customers to tap or swipe for purchases in physical stores.
The move blurs the line between digital lending and traditional card use, and it has real implications for chargebacks, fraud risk, and merchant disputes.
A Shift in Fraud Patterns
Until now, PayPal Credit lived entirely online. Transactions were card-not-present (CNP) by design, which meant merchants were responsible for fraud and authorization risks. With this new physical card, the game changes.
In-store use makes these transactions card-present (CP). That’s significant. In CP environments, the liability for fraud shifts to the card issuer—as long as merchants follow EMV rules and use chip-enabled terminals. In short, if a fraudster uses a stolen card in-store and the chip is read properly, PayPal, not the merchant, eats the loss.
But that doesn’t mean all risk is gone.
Disputes May Still Be a Headache
Even with card-present protections, merchants should stay alert. Consumers can still dispute charges for reasons like “item not received,” “product not as described,” or unauthorized use. In those cases, merchants may need to provide signed receipts, surveillance footage, or return records to fight chargebacks. The usual documentation rules still apply.
Also, PayPal’s internal dispute process can complicate things. Since the card ties back to a PayPal account, users might trigger claims within PayPal’s Resolution Center, not just through the card network. This creates a dual-layered dispute risk: one with PayPal and one with Synchrony, the bank behind the PayPal Credit program.
Storefronts Could See New Types of Customers and Fraud
Merchants used to seeing PayPal Credit on eCommerce orders might soon spot it at the checkout terminal. This could bring new foot traffic, but also unfamiliar fraud behavior. Some users may try to use online credit in stores where returns are easier or where identity checks are weak. Fraudsters could also test stolen PayPal credit lines with small in-store purchases before ramping up.
For now, the card will be accepted anywhere Mastercard is. That makes it broadly compatible, but also exposes it to all the same in-person fraud vectors as other credit cards—skimming, social engineering, and synthetic identity abuse.
No Word Yet on Chargeback Protection Enhancements
There’s no mention of new merchant protections tied to this card. While PayPal offers some buyer and seller protection policies through its platform, it’s unclear if the physical card changes any of that. That means merchants should treat it like any other credit card chargeback unless PayPal updates its terms.
A Blended Model Means Blended Risks
The introduction of a physical card for online credit is part of a larger trend: payment tools that bridge online and offline commerce. For merchants, it’s another reminder to audit fraud controls on both sides. Card-present systems aren’t immune to disputes. And now, chargebacks could come from customers who used PayPal Credit at the point of sale.
Need to Stay Ahead of These Changes?
The new card blurs boundaries and risks. Chargeblast can be integrated with PayPal, which helps merchants spot dispute trends early and prevent chargebacks before they hit. Whether it’s online or in-store fraud, we’ve got tools to help you adapt fast.
