Major Nelson reports if you are in the United States, you can now use PayPal as a method of payment for the Xbox LIVE Marketplace. You can use PayPal to buy Microsoft Points without having to associate your credit card information to your Xbox LIVE account. If you are new to PayPal, please sign up first and then follow the steps below to associate your account with Xbox LIVE. It’s pretty easy and just like adding a credit card to your account. Sign in to Xbox.com and head to the account summary page. From there choose “Manage Payment Options” (from the left navigation menu) then click “Add a new PayPal Account.” Follow the instructions and you’ll be set up in no time. A couple of things to point out: PayPal is currently supported for Xbox LIVE users in the U.S. only. PayPal can only be used to purchase Microsoft Points on Xbox.com. PayPal accounts are not available for purchasing Microsoft Points on the Xbox 360 console. You can associate multiple Pay Pal accounts with your Xbox LIVE account. Source
US only Hopefully they'll bring it over here soon as I'd rather buy points through PayPal than wait for them to come through the letterbox.
I think that paypal is mainly for buying 360 games from XBL. As i've seen 360 games for 19.99 (plus tax) and not 1600 Microsoft Points. It annoys me to no end that it says plus tax at the end of that.
The Xbox original games have no tax. Also when you buy a Microsoft Point card you have tax, so the 360 demand games should be without tax and at 1600 Microsoft Points.
I love having tax prices already in the price when we buy games and stuff in the shops, however its why we are always charged more
I would prefer to have the tax already factored into the price, as opposed to trying to figure it out myself (though it's not that hard).