I had the same problem. I called customer support as @kernowlass instructed and made some progress, but there was nothing they could do. They claim that my credit card number may be a recycled number and it is already linked to a closed paypal account. Their instructions were for me to get with my credit card company and get a new credit card number. I have no problems using this card with any other merchant. It seems that it's easier for paypal to pass their problems off to the credit card companies rather than purge old credit card numbers tied to closed accounts from their system.
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