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I know what they're talking about.

If you generate labels directly from your Paypal account, you pay "face value", be it UPS or USPS.

Now, if you go to the UPS or USPS web site, and generate labels there, and use your Paypal Debit card (as a Mastercard), you'll pay "face value" again but get 1.5% off the purchase kicked back (cashback) to your account.

What you loose is the automation of just being able to click and print. Going to the web sites you have to fill in all the data manually, and while you also get the tracking/confirmation numbers, you loose the seamlessness of it.

While the 1.5% would add up over time, I stick to the time saving seamless method. What I do on occasion though is if I have a item that takes a lot of postage (say > $40) then I go to the web site and do it manually to get the cashback. Doing a $60 UPS item will get you a cashback of about $2.00, so once in a while it's worth it to offset your fees.
Per PayPal's site itself on the cashback:

Financial Products - PayPal Debit Card

When did the PayPal Preferred cashback change from 1.5% to 1.0%?

On March 24, 2005, the cashback bonus for PayPal Preferred members changed from 1.5% to 1.0%. All members with the PayPal Preferred status on or before March 24, 2005, will continue to receive 1.5% cashback as long as they continue to meet the PayPal Preferred Requirements, and their accounts remain in good standing.

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