Right on, Paypal was designed exactly for Bob to send Sally $10.27 for yesterday's lunch tab, according to Paypal's own promotion and vision on day one. Letting businesses, charities, and other orgs use it as a payment processor came quite a bit later.

I think it's safe to say that they, quite reasonably, figured out that the former is a risk-infested nightmare. Saying "hey, that actually cost $11, Bob!" is a minor thing in an interpersonal relationship, but when it has the potential to trigger a fraud investigation (think ex-girlfriend marking all 'casual' transactions as fraud after a breakup) you invite chaos.

So yes, they switched on that, but it's really not hard to see why. I wouldn't want to use it for personal transactions. (In Germany, we mostly use bank wire transfers for that.)

Well it was at least originally marketed as being for interpersonal payments, as a service that John Q. Public would want an account on for that purpose.

TBH you might be correct. I don't think that's what is currently optimized for, but even there, it still works pretty damn well. Haters gonna hate...