If you pay for something with Paypal, and tell it to use say, Chase Freedom, how do they determine which category the purchase is for 5% reward? What will the transaction show up on the CC bill as?
Do you still get the CC benefits such as extended warranty?
You don't earn 5% cashback with PayPal. PayPal acts as a third party in the transaction. PayPal pays the merchant and separately charges money on your credit card account.
From Chase perspective you are making a purchase from PayPal, not from a merchant, therefore you do NOT have purchase protection, extended warranty, etc.
PayPal codes its transaction as professional service, only Citi Business CC gives bonus points on professional service.