the stupidity level of Japan is amazingly high.
The number of people that rationalise their lack of understanding of the systems as Japan being "stupid" is amazingly high.
What you're dealing with is a common complaint for recent arrivals dealing with banks.
Paypal uses a surname and given name(s) field. The form you used to open your bank account has a 姓 (surname) and 名 (given name) field.
One of these was filled out incorrectly, most likely the bank form. The good news is that the bank form is actually a very simple fix, takes about five minutes and can be done at any branch of your bank.
I have a handful of bank accounts that were all opened by various company secretaries for me during my early days in Japan, all using various forms of my name - think Edward, Ed, Edd, Eddie, etc. and a couple with the names reversed.
I took an afternoon and went around to each of the banks with ID, now they all match (and use my proper registered name).
FWIW, 姓 (surname) and 名 (given name) each have legally distinct meanings, and cannot be used interchangeably by financial institutions as per FSA regulation. This is for customer protection and security, not simply for reasons of pedantry.
Oh, and nice to see you back, Spicy!