Someone found no option for Paypal under Add Payment Method.Here is the solution.
You need a Credit/Debit card
Laptop or Desktop PC (Optional)
1.Go to “https://play.google.com/store/account” in your browser；
2.Sign in and click ”Add Payment”
3.Select PayPal. It will redirect you to PayPal. Press ”Continue”.
4.Once in PayPal, sign in to your PayPal account.
5.This is what our friend “Smokeyy” told us… Enter your Credit/Debit card information.
6.Once you do that, press the “Agree and Continue” button.
Your PayPal account should now be linked to your Google Play Store account.