1. You need either a business or premier account to use IPN. (sourceforge)
2. Enable Auto Return (in Paypal > Profile > My Seller Tools > Website Preferences > Auto Reply > On) to redirect users back to your site after making a payment.
The paypal return parameter overrides the Paypal account/profile auto return url. If you are running multiple websites on a single magento instance, you can use a single Paypal account with auto return on. Just place whatever return url you want in the Paypal account, it will be overridden by the return parameter (source: magento wiki).
NOTE: If you have turned on Auto Return and have chosen to turn on PayPal Account Optional for new users, a new user will not be automatically directed back to your website, but will be given the option to return. (source: paypal)
Paypal return parameter example
<input type=”hidden” name=”return” value=”http://www.davidtan.org”>
Paypal IPN Notification URL
Paypal Profile > My Selling Tools > IPN Settings > Fill Notificaition URL and enable receive IPN message
Even though you have not enabled receiving IPN messages in your Profile or you have reset your preference by turning off IPN messages, PayPal still sends IPN messages to the notification URL you specify for a specific payment. (source: paypal)
Paypal notification url parameter for a specific payment example
<input type=”hidden” name=”notify_url” value=”www.davidtan.org/ipn.php”>
IPN Variable References
These variables are useful for your IPN listener (IPN notification URL script, in my example http://www.davidtan.org/ipn.php) to gather info such as transaction id and test if the transaction is completed etc. These details can be saved into database and used to check if someone has actually made a legit payment. (source: Paypal)