Sounds like you are using paypal payments standard.
this choice sends the user to the paypal site from the confirm page. The transaction is processed on the paypal site whether the customer uses a credit card or a paypal account.
for the shipping problem, open the bindings panel and expand the usps shipping binding group. Add the Full request and Full response binding to the shipping failure page, this will add information to the failure page to help troubleshoot why the shipping is failing.