I've used Paypal to buy memberships in science fiction conventions, concert tickets, stockings, hair dye, and books all online. I've also sent money to family members for joint gifts and contributed to charities.
I've seen it used at pow wows and trade shows as well although the new wireless credit card terminals seems to have overtaken that.
I've had merchants tell me they don't take it, but I've never been asked what it is.