Yes, as long as you are not selling digital goods, you can use the PayPal API. Apple does not restrict iPhone users from paying with PayPal for physical goods and real world services.
You can also use it for donations to charitable institutions.
PapPal also allows different types of payments like chained payments, parallel payments etc.
Although it does not use PayPal, you can pay for goods in the Amazon App with real money. PayPal is no different. An easily verifiable example of an app that uses paypal for sure is PayPal itself!
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