PayPal is limiting the type of payments its users in Singapore can receive. This is in line with what happened in other countries and it's due to local legislation regulating the area.
It's only personal payments that are restricted, users can still make and receive payments to and from shops, even small ones.
Singapore is not the first to ban such payments, there are restrictions in place in several other countries. In Singapore, cash gifts and similar transactions are now prohibited. However, anyone setting up a shop relying on PayPal has nothing to worry about.
Operating a global payments business is not easy, as PayPal can attest. Despite its problems and the many people that hate it, PayPal remains pretty much the only tool of its kind and scale.
That said, the payments space is gearing up for a major battle as several new players are lining up, especially in mobile payments.