Read the checkout screen carefully, it maybe asking you to select a back up payment method to set up a billing agreement in your automatic payments in PayPal to streamline your checkout experience for future purchases. Look for any fine print during the checkout process. It should let you use your PayPal balance; in such cases payment "should" always use the PayPal balance first by default and then the back up if you happen to not have enough.
Thank you for the response @sharpiemarker but it looks like I'll need to raise a ticket to PayPal Support. I carefully studied the window, and that's really a window of "Choose the way to pay" without an option to use PP balance. As you say in such cases it should[Removed. Phone #s not permitted]ort of a bug.
