Courtesy of @Ironhide
Hi community,
Some of might know me from a different botting website (rs3). I've been into the runescape market since 2010. Started with powerleveling and slowy worked my way up. Now 90+% of the trades I do were through PayPal. PayPal has a darkside. Been there, did many stupid things like using fake name, making new ones, accepting gift payments, losing disputes,...
I'll try to give you some strict guidelines.
(watch this considering you only sell digital goods!)
First I'll educate you a bit.
1. Seller protection
Most people complain this is horrible when using PayPal. Fair opinion but we are all dealing with digital goods here. This is NOT covered under seller protection. I hear you thinking why the F would I continue using PayPal if they won't protect me?
This is for non-receipt disputes, unauthorized, and chargeback*.
*To be correct the term chargeback is only used when a bank/credit card reverse the money from PayPal. Disputes are for PayPal funds directly. Now you know the difference people Chargeback != dispute 
* Well PayPal is extremely easy to use. Many people have access to it so not accepting it is a suicide for your business.
* You will win disputes automatically in some cases (I'll discuss this later)
* Easy to transfer funds to your bank (thats where it really counts isn't it? ^^)
1.1 Buyer protection
Buyers are NOT protected for disputes about digital goods. However this does NOT apply when there was unauthorized access to the buyers account (or he claims to be). If fraud was detected on the buyers account PayPal will fully refund the transaction amount.
I will not go into dept since, going to be frank here, the scam rate is higher by buyers then sellers.
2. How to sell
Most of you might have heard. Only accept personal payments since they can't dispute it. Well this is 100% wrong. You can dispute a personal payment as unauthorized after any date after the transaction is completed. If you then have to explain PayPal you are selling stuff all the time then you'll be limited for fee abuse. So please stop using this method.
My next advice is use a website (I'm not sure if you need sponsor for that on this forum) but if you take it serious then you should be able to afford a simple website. There are plenty of cart software out there. My personal favourite is magento (devoleped by PayPal). Most cart systems are free. Easy to use. Thousand of plugins. Unless you are smart enough to write your own. That is perfectely fine too ^^. Now what are the benifits of using your own website?
*PayPal will see immediately where your income comes from
*Hold a PayPal business account
*Less chance of getting limited
*Optional, you can apply for lower fee rates
*Seller protection
Another method is using the PayPal invoice system. With a few clicks you can send payment request to someone. I believe any account type can use this. Personal,premier and business.
First click the request money tab:
Fill in buyer's email, amount and press goods.
TIP: Check if the buyer has a verified account. If he isn't you will NOT be eligible for seller protection.
www.paypal.com/verified/pal=buyerEmail@comeshere.com (replace with buyers email)
If it says verified go ahead and press continue on your request payment tab we opened before.
You should have this page
Click request money, buyer can now click Pay on his PayPal account. Now when that is done check the transaction details.
Notice seller protection - eligible?
Perfect isn't it ^^
3. What to do with disputes?
Well assuming it is buyer went first. So you have his money. You delivered whatever he ordered and you get following dispute.
Should something like this:
I literally lmao at those disputes. As we learned before. Buyers are not protected for digital goods. But Ironhide you also said sellers aren't 
why u do dis.
Well good sir his claim will be denied since he is not covered so do not worry that you aren't. Easy add a note to the dispute with subject digital goods.
Say what you've sold. This should win the dispute for you already but since we are nice guys we will also provide proof of delivery. Attach ingame screenshots, skype convo's.... If you really want to speed it up call their live support and explain yet again that it were digital goods. You delivered. Provided proof of delivery and that the buyer is not covered but that he is trying to abuse the PayPal system. I've used those lines many times and the dispute was instantly closed.
The dispute of hell. When this happens you can look at it of the bright sight. If the buyer is a fucktard scammer then you should be happy he filed this. At the moment his account is limited! Yes that's right. Whenever ever you file an unauthorized claim PayPal safety limits you until the issue is resolved. If the twat is underaged or does this too often. Perma limit 
Sadly this won't give your money back. You'll have to social engineer you through it to get your money. I do know a loophole to win those disputes but sadly I don't think it is the time to share this. Scammers will abusive this knowledge. Only thing I can tell you is DO NOT CLAIM IT WERE DIGITAL GOODS!
Useful tools,sources
Screenshot software - puush (master race!) easy way to get proof of your trades.
Anti fraud plugin for webstore - maxmind (8 cent/transaction, used this myself for a long time!)
PayPal seller/buyer agreement - https://www.paypal.com/webapps/mpp/ua/useragreement-full?country.x=US&locale.x=en_US
Only accept from verified users - www.paypal.com/verified/pal=buyerEmail@comeshere.com (replace with buyers email)
Don't accept personal payments if you are selling goods. If there is no fee then it means buyer send it wrong!
*Before I forget. Loophole for you USA PayPal holders. PayPal will report your income after 25k received/200 transactions.
PayPal allows you to have a personal account + a business. So if 1 is about to reach the limit just switch!*