Paypal is a built-in payment option in magento, you just have to activate it, lets activate it.

Go to System > configuration

Click on “Payment Methods” on left under “Sales Menu

Here we got different options for paypal, choose one you need.
Let me explain these options if you don’t know them already 🙂

1. Paypal payflow pro:
This is the option you need to go with if you are going to accept credit cards on your site and you DO NOT want your customers to leave your website during payment.
Customers will put their credit card information in your website, paypal will process these information behind the scene.

Configuration:
Hit on configuration button, provide paypal information there, i.e partner, user, vendor, password.
You can put it on test mode before setting your website live.
Payment actions: you can select either autorization or sale, authorization is customer authorize your website to charge and your website charges the card on shipping while sale option is to charge on the checkout.

2. Paypal Website Payments Standard (Includes Express Checkout)
This option is mainly use to process payment options all the way by paypal itself, your customers are redirected to paypal website to enter their creditcard or account payment and then they get back to your website after successful payment, paypal updates your website behind the scene.
This also includes the credit card processing as well.

Configuration:
This has two parts, first part is for express checkout/credit card processing here you need to provide the api information you got from your paypal, for testing turn sandbox mode on before setting site live.

3. Paypal Website Payments Pro Hosted Solution
If you are more conscious about PCI compliance then this option is for you, your customers remain on your website but on the paypal page which is seamlessly integrated into your website, customers actually process their payments on paypal.

4. Paypal Express Checkout
This option gives your customers two options: They can jump over to the PayPal site to login to their account BEFORE completing checkout on your store (which allows them to select their address information there and never have to re-type their address details on YOUR site, thus the “express” part of the transaction) and then choosing shipping choices and discounts/coupons etc before completing the order
– OR –
they can go to the PayPal site to login to their account AFTER making shipping/payment/coupon selections on your site (and creating an account on your store and typing their address info on your store), much like they do with Standard.

Configuration:
Configurations for 3 and 4 are almost same as 1 and 2.

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