Linden Lab Official:My Paypal is ok, but it's still failing. Could it be your Monthly Maximum limit?

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By default, there is a monthly maximum limit of US$250.00 set by Paypal.

To change it:

1. Log into Paypal.
2. Click the My Account tab.
3. Click the Profile subtab.
4. Under the Financial Information section, click Recurring payments dashboard.
5. Click My preapproved payments page link.
6. Click Linden Research from the Merchant list.
7. In the Bill Term section, click Edit Billing Limit.
8. Enter the total maximum dollar value you want to set.
9. Click Save.