Step 1: Login to your PayPal account.

Step 2: Link to your bank account by going to profile->link/edit account.

Step 3: Add your credit card information to your account. This needs to be done even for a business account.

Go to Profile->link/edit card.

Step 4: Enter API Credentials. Click on Profile.

Step 5: Navigate to My Selling Tools -> API Access and click Update.

Step 1: Go to PayPal’s website and login to your PayPal business account.

Step 2: After logging in, you’ll arrive at the My Account page. See the screen shot below.

Step 3: From the top navigation bar, click on the Profile link.

Step 4: Click on My Selling tools.

Step 5: Find Instant payment notifications on the page, click on Update button.

Step 6:Click on the Choose IPN Settings button

Step 7: You will then be prompted for a Notification URL. This should be set to your storefront homepage’s URL. Magento will automatically override this URL as needed to a proper URL for receiving notifications.

Step 8: Click on the Save button.

Step 9: If you want to be able to view the IPN history in the Magento admin, go go History->IPN History and view the history.

Step 1: On the My Profile page, click on My selling tools.

Step 2: Click on the Paypal button language encoding button.

Step 3: Select a language, then click the Save button.

Step 4: In the More Encoding Options page, select “UTF-8.” The second option should indicate “Yes.”

Step 5: Save your changes.

Note: All these settings are required for PayPal Standard. If you want to set up PayPal Express Checkout, follow the steps below.

Step 1: Before you begin, make sure you have an API username, password, and signature issued by PayPal.

Step 2: Return to the PayPal configuration page.

In the “Express Checkout and Direct Payment” section, you will need to enter three pieces of API data. This is not the same information used by your PayPal business account. Set all fields as shown in the screen shot below.

Step 1: Go to PayPal’s website and login to your PayPal business account.

Step 2: After logging in, you should be on the My Account page.

Step 3: On the top navigation bar, click on Profile.

Step 4: Next, click on My selling tools.

Step 5: Click on API access Update link.

Step 6: The next page will look like the screen shot shown below. To create the API User Name and Password, click on View API Signature.

Step 7: The next page will display your API Signature credentials, which include API username, password and signature. SAVE THIS FOR FUTURE REFERENCE.

Step 8: When finished, click the Done button. You will need to enter this information into the PayPal configuration page in Magento.

Note: All these setting are required to configure your Paypal account. To enter these payment methods in your website, follow the steps outlined below.

Step 1: Log in to your Magento Admin Panel. You will arrive at the main Dashboard screen.

Step 2: Go to System-> Configuration like the screen shot shown below.

Step 3: On the Configuration page, you will see a long list of options on the left side of the page. Scroll down to the Sales section and click Payment Methods.

Step 4: In the Payment Methods page, start with merchant location and select the country where your business is located.

For example, select Denmark:

Step 5: After that, click on PayPal payment solutions

Step 6: Click on the Configuration button like the above screen shot. Several fields will be displayed.

Step 7: Under Required PayPal Settings, enter the email address you used to open your PayPal account. Next, choose “Yes” to enable PayPal as the payment processor for your shopping cart.

Step 8: Under “Basic Settings” – PayPal Payments Standard enter the following information:
Title: Enter a title for this payment action. We recommend that you simply use “PayPal, Credit or Debit Cards.”
Sort Order: You can leave this field blank.
Payment Action: You can choose “Sale” or “Authorization.”

Step 9: After that, click on Advance settings and set all fields as shown in the screenshot below.

Step 10: Click on the Save Config button to save the settings.

Step 11: If you want to offer PayPal Express Checkout, click on Configure.

Step 12: Set all fields as shown in the screen shot below.