Do you have £1.01 in your saved offers like @Gekz showed?I think it's 15 minute window isn't it? that ended ages ago. I think £1.99 is fine anyway, but it may have just not updated the offer page thing yet for some reason.
EDIT: it says >Charge from credit card: £1.99 >Billing Agreement Payment Sent -£1.99 So I guess it worked?
What'll happen is when you buy it with your card and have paypal app installed, paypal will refund the money you spend.I am not sure how this works... I added it to my paypal, went to google play, went to buy something, added paypal account, it doesn't say anything about a discount. I am a bit hesitant to do it as I don't want to go overdrawn on that account's associated bank account. :/