PayPal cardholders who cashed out rewards to their PayPal balance in the past
week may have been charged a fee that was never disclosed. Doctor of Credit
reported the problem on August 11, 2026 and posted an update the same day
saying it has been fixed.
The charge matched PayPal's standard merchant pricing of 3.49% plus $0.49,
which is what PayPal charges businesses to accept a payment, not what
cardholders pay to move their own rewards into their own balance. Doctor of
Credit's read is that PayPal applied that merchant fee schedule to reward
redemptions by mistake, apparently after removing a separate redeem for
cashback option from the rewards menu.
Cardholders got no help from either company while the fee was live. PayPal told
callers it was not charging a fee and pointed them to Synchrony, the issuer.
Synchrony said the same thing in reverse and pointed them back to PayPal.
What to check
Pull up any redemption you sent to your PayPal balance in the past week and
compare the amount deposited against the rewards you cashed out. If the deposit
came up short, call PayPal and ask for the difference to be credited. Doctor of
Credit's guidance is to request the refund directly. At least one cardholder
posted on August 11 that the fee came back automatically with no call, so
it is worth looking at your balance before spending time on the phone.
PayPal has not published a statement on the error. Neither company has said how
many accounts were affected or how many days the fee was applied before it was
corrected.