With Paypal the problem can be one of the following...
- A PSN system issue, which will resolve itself on the next business day
- The Paypal billing address does not exactly match the home address in the PSN account information
- In some cases, the Paypal account must be address-verified, which requires a bank checking account.
Sony changes the verification logic in its billing system regularly, so it is not unusual for a payment card or account that worked before, to suddenly stop being valid. It just means that PSN raised the bar again.