Yeah, i was getting this same issue.
Unfortunately, it looks like paypal are being.. well.. i'm not going to say here, but basically you have to log in to paypal and complete the transaction through your paypal account, using the CC as a backup payment option.
That's pretty much the only way you're going to get cc payments to go through at the moment.
Edit: for chocobo princess - i'm not sure if iChoumaru is having the same thing, but after you enter your details for the cc purchase on the paypal screen and click the orange "review payment" button, it would take you to a paypal "page not found" screen, where it will give you the option to retry or go back. Going back will change the screen from a credit card payment screen, to a 'create a paypal account' screen, with an option to create an account using the same details entered before.