Paypal with SwipeStripe not redirecing

Question

I have SwipeStripe working and would like to enable credit card payment through PayPal. I have installed the paymant-paypal module but am unable to get it to work.

After clicking Proceed to Pay on the checkout page I don't get redirected to the PayPal site (where I believe I should be able to choose from various credit cards). Instead, after few seconds I get redirected to my site with the payment status=failure.

In the database table Payment_Error the error message is:

You are attempting to make a payment without the necessary credentials set

How do I fix this issue?

this is my payment.yml file:

Name: payment
After: 'framework/*','cms/*'
---
PaymentGateway:
  environment:
    'dev'

PaymentProcessor:
  supported_methods:
    dev:
      - 'Cheque'
      - 'PayPalExpress'
    live:
      - 'Cheque'
      - 'PayPalExpress'

PayPalGateway_Express: 
  live:
    authentication:
      username: 'merchant_api1.blabla.com'
      password: '8blablaPXJCVDW5B'
      signature: 'AblablablaYYRCpSSRl31Ai00Os2pnQ5XYyIbEdSPnSxbN7IL'
  dev:
    authentication:
      username: 'merchant_api1.blabla.com'
      password: '8blablaXJCVDW5B'
      signature: 'Ablablablad0v3bYYYRCpSSRl31Ai00Os2pnQ5XYyIbEdSPnSxbN7IL'

I am reading here (https://developer.paypal.com/docs/classic/api/gs_PayPalAPIs/#call) that I should (while testing) also use statis AppID - but have no idea where to put it?

I created paypal sandbox seller and buyer account and am using seller's account username, password and signature in mysite/_config/payment.yml file (as described above). Should I be setting something on paypal site differently?

I did some research and I guess the problem lies in the way my module calls PayPal API - - if I try curl (https://developer.paypal.com/docs/classic/lifecycle/sb_calls/) with my credentials - I get ACK=Success, so I guess the problem is not in credentials but in the way module calls API - - so I am wondering if anyone has got this module to work or there were any modifications? I have a feeling that a call to PayPal API is a problem. If someone can provide any ideas, I would appreciate it a lot.

I am slowly getting some insight of where could be the problem. The API call from my module returns RestfulService_Response - - serialize($response) is this:

O:23:"RestfulService_Response":6:{s:12:" * simpleXML";N;s:17:" * cachedResponse";b:0;s:13:" * statusCode";i:500;s:20:" * statusDescription";s:21:"Internal Server Error";s:10:" 

This means that something is not ok on PayPal server or more likely - I am missing some config settings. I've read somewhere that I should provide btest buyer info somewhere in config, but I don't know how to do that. If someone has a qlue how to do that, would appreciate it a lot.