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At the Payments screen, click the check box to the right left of Accept PayPal.  The screen will expand to show When checked you will be taken to the PayPal configuration fields.Screen

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Enter the following into the expanded fields:

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2. Select from the drop down menu, either PayPal Express Checkout or PayPal Website Payments Pro (Express Checkout and Direct Payments).

3. Configure you Instant Payment notification and Third-party API permissions.

3a. Enter your First-Party Credentials obtained from PayPal:

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If you haven't obtained your credentials, log in to your PayPal account and navigate to the API Access screen at:     

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My AccountProfile [tab]My settings toolsclick “Update” to the right of API Access.

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Click the "Save" button at the bottom of the Payments screen when finished.