Taking your point, I wonder if honestly would be a better policy.

Credit Cards essentially cost paypal more. A more honest solution might be pricing in the cost of credit card transactions fees and chargeback/fraud risk to the customer. I have no doubt this would be bad for conversion rates. It introduces huge friction, going from 0 cost to small percentage costs.

The way they do it now allows users to segment themselves. If you have a strong preference for using credit cards, it's available. If not, well then paypal does. They choose if you don't.

It's like an opt out system. In a lot of cases, thats a good system. For example, I think organ donation should use that system.

The PayPal equivalent would be if you had to opt-out of organ donation every morning and it never remembered your preference. That is a bad faith system.