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How do I test PayPal in the sandbox?
The eBay Sandbox is connected to the PayPal Sandbox. Hence you can do end to end checkout testing for payments with Paypal on the test environment, before you deploy your application to production. Buyers who choose to pay with Paypal are redirected to the Paypal Sandbox Checkout flow to complete their payment using their Paypal Sandbox account. A completed payment is then reflected as paid in the buyer's and seller's MyeBay pages and the ViewItem page on the eBay Sandbox. Developers need to create an account in the Paypal Sandbox and the eBay Sandbox for such testing.
PayPal Sandbox: http://www.sandbox.paypal.com
eBay Sandbox: http://www.sandbox.ebay.com