PayPal is the only method of payment I use on the internet and my iPad is set up to use PayPal. When I try to purchase an app in iTunes with my iPad, the message "PayPal is not supported on this device." pops up. Then I switch payment methods in my iTunes account from Paypal to my Visa card from my Mac and I am able to download the app.
This is caused by an extra level of security feature Apple has introduced. You need to resolve it by contacting Apple. I think that they are working on a fix while they turn off paypal.
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