There are two ways to set PayPal as the default payment method. Within the Google Pay app, you can click on the contactless symbol below the PayPal card or click on the PayPal card and turn on the Default option.

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How do I turn off automatic top up for Google Pay?  
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Where can I use PayPal with Google Pay?
When will my Google Pay account automatically top up?
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Why do I need to create a PIN for Google Pay?