Read this journal from  sigil http://www.furaffinity.net/journal/4474919/
She did a good job of going over Paypal's TOS and explaining the parts that concern artists and art buyers in regards to adult commissions.

I am going to add a few things of my own here.

1) Recently paypal has changed a few things, one of which is that when I get a payment email, the return address is no longer that of the sender, just member@paypal.com. This means that unless I am already very familiar with your name, I have no idea who the payment is coming from at a glance, because there is no address there to cross reference with any content email you send me. So when you send me money, put your FA name in the little note box, and please also include your FA name in your content email so that I don't have to ask you for it.

2) That's ALL you type in the box. Nothing else. No "for the art" and definitely not "for the porn art". Any payment I receive that doesn't follow those directions will be refunded with a request to send it again properly, and if you're stupid enough to mention porn in the box, I will refuse to ever do work for you. This is not a trivial or joking matter, because paypal can and will ban me and you for something like that, even if it is a joke.

3) I keep seeing artists complain about customers not paying the paypal fee, or complain about getting fee'd, or customers not using the "gift" or "personal" option, and I try to correct them whenever I can, but here it is for everyone: AS A BUYER, YOU ARE NOT OBLIGATED TO PAY THE SELLER'S PAYPAL FEES. The fees are the price an artist pays as a seller using the service to receive money. If an artist demands you pay extra for a fee, run away. If you WANT to pay more, that is totally up to you. But it is not your responsibility.

Artists: DO NOT demand customers use the gift or personal option. Too many transactions of this type will flag your account as suspicious. Do not demand customers cover your fees. If paypal finds out, they will ban you. If paypal wanted customers to pay fees, then they'd fee them and not you. The FEES ARE FOR YOU AND YOU ALONE. It's the cost of using their service to make money. Suck it up.

If you want buyers to cover your fees or you want out of paying fees, the solution is simple. Figure out how much you want to make on a certain piece/project, then raise your prices enough that the fee is covered and you still make the amount you want. If you're a full time artist and make enough to have to file taxes, those paypal fees are a tax write-off. Embrace them.

If you don't make enough to be considered self employed for taxes, still, don't complain about the fees or try to get out of them. If your paypal account gets banned, you're fucked. Yes, there are other payment processing services out there, but the majority of people don't use them and don't want to bother signing up for something new.

HOWEVER!

4) Everyone (both artists and buyers) should have at least one backup service in the event that they get ass-reamed by paypal. Sign up for Serve or Dwolla if possible. Those so far seem to be the two that most people are using besides paypal. Both are just as good if not better than paypal. Artists should have accounts on as many payment processors as possible. It broadens their ability to accept money from people who can't for whatever reason use paypal.

Right now, paypal has the monopoly on online money transfers. This is mainly because they were the first and only service for a very long time, and people are just too lazy to switch and use anything else even though paypal has done some very questionable and downright asinine things in the past because they know they can get away with it.

If you need to send me money for artwork and do not want to or cannot use paypal for whatever reason, I can accept payments from Serve, and also from Dwolla via chaosie's account. Just ask me.