Originally Posted by blackmonsters

Paypal transactions can trigger an IPN request to your webserver with the information you need
to create account.

This is set up on your website as a secret script that only paypal knows and can request.

The secret script link is set up in your paypal admin.

This process is documented here :

https://developer.paypal.com/api/nvp-soap/ipn/

This process requires you to create a server side script to manage sales and members.

This is how it works for all merchants; but paypal has rules about what you can sale and that's what you have to be 100% safe about.