How to use your GTBank Naira Mastercard on PayPal - Nigeria

Why can't I use my GTB Naira Mastercard card on PayPal anymore?

Have you asked yourself that question recently? Or the slightly different variant of "Why can't I use my GTBank Naira Mastercard on Paypal"? One other popular variant I imagine would be: "Why did GTBank block Nigerians from using their Naira Debit Mastercard on Paypal".

If you're looking for the answer to any of those questions, then be merry. Cos' today is the day that you find the solution to that problem. A surprisingly very simple solution, if I may say.

GTBank Naira Mastercard + PayPal

If you don't care for the full explanation of this problem, feel free to skip to the final section (How to unblock your GTBank Naira Mastercard on Paypal). The next 3 sections only serve to explain the problem so you can get the full story behind this undesirable restriction on your GTBank Naira Mastercard.

Why does my GTBank Naira Mastercard not work on Paypal (anymore)?

Before mid-2016 or so, my GTBank Naira Mastercard used to work seamlessly with PayPal. I added the card to PayPal and I sure used it a few times successfully before that time.

A few months ago, I 'bought' my first ever Linux virtual machine from Digital Ocean. At the point of payment, I tried to add my Fidelity Dollar debit Mastercard directly, but it failed with the error: "Digital Ocean does not currently accept debit cards".

Fortunately, Digital Ocean accepts Paypal. So, I just went ahead to add that Fidelity Dollar debit card to PayPal, and then use PayPal to pay Digital Ocean from the same card. At the time, I had about $10 in the domiciliary account linked to the debit card.

My payment went through seamlessly. And things were good until I ran out of dollars in my Fidelity Bank domiciliary account. Since I was not ready to buy dollars to fund the account, I had no choice but to try to use my GTBank Naira Mastercard (through PayPal) for the next Digital Ocean subscription.

Unfortunately, my payment failed. I remembered that the last time before that when I tried to use the GTBank Naira Mastercard via PayPal, my transaction also failed. I had assumed it was due to a network error. But now, when it failed multiple times back-to-back, I knew it had to be something more than that.

This was when I recalled reading from a thread on TechCabal's Radar about GTBank having blocked the use of their Naira Mastercard through PayPal. Hmm. I did a bit of Googling and decided that was likely to be the problem here.

However, since I had to keep paying for my Digital Ocean account, I had no option but to find a way to pay (and Paypal seemed like my only option). One option was to find out which Nigerian bank allows their Naira denominated debit cards to be used on PayPal. Needless to say, that's was likely to be a long thing, since I would at least, first have to request a new card. And at the worst, I might have had to open a new bank account. The fact that international transactions are completely blocked off on most Nigerian banks' cards (read Nigeria's FX crisis) is another headache on its own.

I decided to do a little more research before giving up on GTBank Naira Mastercard since that was easier than the above option. And fortunately, I found a solution in less than 30 minutes of googling. The reason my transactions were failing was simple. GTBank placed a DCC (Direct Currency Conversion) restriction on their Naira denominated cards.

What is DCC (Direct Currency Conversion)?

Essentially, PayPal was automatically converting my dollar transaction to Naira using CBN's official rate (because my card was a Naira denominated card). My transaction was a $5 transaction. When you multiply that by the CBN rate at the time (say ₦320:$1), my GTBank account would be charged for 1600 Naira.

The thing about doing international transactions with your Naira card is that, even if your card is charged in Naira, your bank has to find dollars to pay back the international merchant (settlement). So, if my $5 transaction had been successful, GTBank would have had to find a source of dollars cheaper than or equal to ₦320:$1 (CBN rate) to be able to settle the merchant for that transaction. If not, my transaction would have caused them a financial loss. GTBank's rate for customers at the time was about ₦380:$1. Which means that the bank would have lost a fraction of 300 Naira on this transaction, depending on their FX sourcing rate.

Now, you can think that such a minute loss is not too much for a bank like GTBank to bear for their customers. After all, they can probably get dollars at a rate close to the CBN official rate due to their might. However, when you multiply the marginal loss on a transaction by the several thousand (if not millions) Nigerians who use a GTBank Naira Mastercard for international shopping, it's not hard to imagine how the bank can end up neck deep in losses amounting to billions of Naira in a matter of days.

Hence, to curtail potential bankruptcy, GTBank blocked DCC transactions on their Naira Mastercard for all customers (which probably includes you). This means that when the bank's card processing system receives a transaction originating from an international location (not Nigeria) but bearing a charge in Naira, they instruct the system to automatically decline it by means of a system configuration.

I hope that you can agree with me at this point that the bank is justified in making this decision. After all, GTBank is very far from being a not-for-profit organization.

How can I use my GTBank Naira Mastercard on PayPal?

The solution to this problem is very simple. You simply need to get on GTBank's side of this FX economics to solve the problem. If GTBank's system receives your charge in dollars and not Naira for a transaction originating from the US, then it can use a rate decided by GTBank to convert the transaction to Naira before passing the charge to your account.

In this way, GTBank can ensure that they apply a rate to your transaction that is sufficiently higher than their dollar-sourcing rate to make them a good profit margin off of it after settling the merchant.

Hence, the solution is for you to instruct PayPal to not convert your transaction to Naira and instead, send the original transaction currency (e.g. dollars) like that to your bank. The process is very simple, but the interface to do it is inexplicably well-hidden away in their menu system. In fact, I noticed that the web page to make this setting change has the old PayPal look-and-feel. Not surprisingly, there's currently no way to navigate to this page on the modern PayPal UI menu.

The three-step process to remove the restriction on using your GTBank Naira Mastercard on PayPal comes next.

How to unblock your GTBank Naira Mastercard on Paypal

1. Visit the PayPal card setting management page on your internet browser by clicking here (you might have to log on to your PayPal account if you're not already logged in). To ensure that this is not a phishing attempt on your PayPal account, please verify that the certificate on the loaded page belongs to PayPal.

PayPal secure Certificate

PayPal card currency conversion settings page

2. Click the Conversion Options link beside your GTBank Naira Mastercard in the list of cards

Ask Paypal to use Mastercard/VISA's currency conversion process, not theirs. This is what your bank wants

3. Most likely, the first option is selected on your GTBank card. The first option enables PayPal's currency conversion process which is what causes the whole DCC problem. Just select the second option (Bill me in the currency listed on the seller's (merchant's) invoice) and submit the form.

That's it! Just ensure your GTBank Naira Mastercard is well funded enough, then retry your PayPal transaction. It will be successful.  At least, so it was in my case. I followed this same process and not up to 5 minutes after, I was able to make a successful payment to the same Digital Ocean where my transaction had previously failed multiple times. 

P.S.

I think it would go a long way if GTBank would send a simple SMS or link to a customer to recommend possible solutions when their transaction fails because of a direct currency conversion.