The problem of having peer-to-peer Ethereum to Fiat exchanges is that there is no enforced trust, the crypto seller could receive the fiat and choose not to pay the buyer or vice versa the buyer could receive the crypto and choose not to pay the seller. There are solutions to this problem but they come in centralized forms which would require trusting a third party and having to provide identification. Certain countries would have cryptocurrencies banned and therefore no access to centralized exchanges but those countries would still have access to payment services such as Paypal. This solution involves a seller matching with a buyer, creating a Paypal invoice for an agreed amount of Ethereum and locking up the Ethereum in a smart contract. This Ethereum is then unlocked when the invoice is paid, the smart contract uses Chainlink Oracles to confirm that the invoice has been paid. The contract can confirm with multiple Oracles making it more decentralized and therefore more secure. If the Invoice is paid then the Buyer can withdraw their funds, if the Invoice isn’t paid within a day the Seller can take withdraw their funds.
I am not handling any funds as users are interacting directly with a smart contract that can be deployed by anyone, takes no fees and is run on a decentralized platform. Chargebacks are a constant issue in all markets, and in fully decentralised crypto to FIAT trading, without KYC, too. I believe adding more payment options that are more crypto friendly will restrict any issue PayPal may cause.
How will you handle Paypal chargebacks? Say I sent some ETH to A, and A returned some USD via Paypal. After your service verifies it, and swaps it, I get the USD. Now, if A perform a Paypal chargeback, I lose that USD (cant get back my ETH). Paypal always protects the buyers and not the sellers. As such, I'm sorry to say, this service will simply fail and you are opening yourself up to lawsuits.