I tracked this down and paypal is giving an error: "invalid paypal account"...
Make sure the email address you entered is the paypal user email address that matches the merchant ID you entered. Those are verified and need to match with paypal's account settings.
Do you have a verified business account? You may need to sign up for a business account and verify before this will work, or it may not be available in your region.
You will have to contact paypal for more information about how to get your account ready for paypal credit support.