After a smooth and productive beta test, we're very happy to announce the full public release of functionality that allows sellers to pay their Etsy bills via PayPal. As a seller, you will now see an option for PayPal under "Method of payment" when you go to Your Etsy > Your Etsy bill > Make a payment.
A few important notes:
Etsy sellers still need to keep a valid credit card on file with Etsy as a requirement to sell on Etsy.
With this release we are also removing the minimum payment amount for seller fee payments, whether paid by credit card or PayPal. Previously, Etsy only accepted payments of $1 or more from sellers. This is no longer the case—Etsy sellers will be expected to pay their bills in full regardless of the amount. Etsy sellers are expected to pay their bills in accordance with our collection policy (see more about this here: http://www.etsy.com/storque/article/2898/
We will be sending an email out to all Etsy sellers regarding these changes before the next billing cycle.