Can I use a PayPal donation button in my Android app in Google Play?
I contacted them and they replied as below:
Thank you for contacting the Google Play Team.
I see that your question is regarding accepting donations through PayPal. Donations may only be collected within an app under certain conditions:
Donations are only permitted for validated non-profit charitable organizations (for example, a validated 501(c)(3) charitable organization or the local equivalent).
Donations must be facilitated via a web browser, and any collection must be made through a secure payment system.
If you belong to an eligible charitable organization, please follow these steps:
Attach a copy of your organization’s IRS determination letter or other acceptable proof in your reply to this notification. The provided information must indicate your status as a charitable organization.
Ensure your app only facilitates donations via a web browser as specified above.
Submit your app for review.
Alternatively, if you are not a charitable organization, you must remove the donation functionality from your app, or accept payment through Google Play's in-app billing service or Paid app distribution on the Play Store. You can learn more about in-app billing in our Help Center: http://developer.android.com/google/play/billing/index.html
I hope this helps. Thank you for your support of Google Play.
Regards, Bruce The Google Play Team
Google Play says you can't (unless you are a validated non-profit charitable organization).
However, you can try putting the link to your website into the app, where you have a PayPal donation button (along with other info about the app, of course). It doesn't seem to break the Google Play rules. But I wouldn't recommend naming this button "Donate". Maybe, "Support development of this app" would be a good choice.
update 2017: This app no longer has the Paypal donation option
I just saw this app with PayPal donation option on the Play Store, but I'm not sure since when, maybe the guys at Google haven't seen the app yet. It is last updated one month ago... https://play.google.com/store/apps/details?id=com.zdvdev.sef
The option is available in the menu and it opens up a link in the browser.