Help understanding what paypal does when it gets a charge

[TheOracle]

I am trying to find out how PayPal handles charges. It appears that it just keeps trying to find a valid credit card that it can apply the payment to, is that correct?

I had a 3 year subscription come due and American Express rejected it. I was OK was that as I wanted to figure out if I really wanted to continue the subscription. I was told I had two months to pay or they would delete my account. So I took a few weeks and then decided I would continue. So I went to pay it. It turns out it had been paid. PayPal used another credit card. And, I notice that in my account my default credit card is one that I no longer have. So it appears that PayPal

1) tried to charge my default card (no longer valid)

2) tried to charge my American Express card (charge declined)

3) charged the next card in it's search for one it can charge (went through)

[kernowlass]

@TheOracle 

If you do not cancel a subscription then paypal will pay it.

If your preferred funding source is not available then they will use another one.

Read the automatic payments section in the user agreement

https://www.paypal.com/us/legalhub/useragreement-full?locale.x=en_US#sending-money

Automatic payments

Some sellers allow you to store PayPal as the way you pay when making purchases on their site, so you can check out faster. Often, this entails creating an agreement with the seller that permits them to request that we charge your PayPal account each time you make a purchase.

When you first set up an automatic payment agreement or store PayPal as a payment method with a seller, you may have the option to set up a preferred payment method for such agreement. You can review, set, or change a preferred payment method for an automatic payment agreement in your account settings on paypal.com or in the PayPal app.

Your preferred payment method for an automatic payment agreement will be used for transactions with that seller. If you have available balance in a linked Balance Account, that balance may be used before your preferred payment method, depending on your applicable automatic payment agreement with the seller.

If you have not set a preferred payment method for an automatic payment agreement, or if your preferred payment method for an automatic payment agreement is unavailable (for example, due to fraud risk or because it is expired) you authorize PayPal to charge the backup payment method in the following order, if applicable: 1. Balance Account, PayPal Debit Card (which allows you to access your Balance Account) or balance in your business account (if we’ve been able to verify the required identifying information you provide to us); 2. Bank account (when PayPal pays the recipient before we receive the funds from your bank); 3. PayPal co-branded credit card; 4. Debit card; 5. Credit card; and 6. E-check (when PayPal waits to receive the funds from your bank before we pay the recipient). However, if a bank account is used as the payment method for a transaction and funding fails (for example, as a result of insufficient funds), PayPal may attempt another payment method as a backup notwithstanding the order specified above (typically a credit card, if applicable). To help minimize disruptions in your automatic payments, we may update your payment method information associated with such automatic payments;