The reason you see this is because PayPal uses the Discover network for certain merchant's in-store payment solutions. So while the charge will still be charged to the proper card you've setup for in-store checkout, as well as any refunds if necessary, you may still see it reflect as "Discover-XXXX" at the bottom of your PayPal receipt. This doesn't mean you have a card or account with Discover. This is direct from PayPal support
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I have same problem when I show at Lowe's I get charged to correct card and receipt from PayPal is correct but the receipt from Lowe's shows Discover card as payment, Lowe's said nothing they can do and it's PayPal. When to talk to PP they says it's not them. Contacted Discover and they verified I do not have a card. Also when I get refund Lowe's says it's going back on my Discover and I do get the refund on the correct card so everything works like it is suppose to except the Discover card name and last 4 numbers showing up on my Lowe's receipt.
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