In the end the PayPal support team didn't response back at all and we were left to find what was wrong.
What we discovered is that although our account for Production was activated to receive payments, the Sandbox account had to be activated separately, after doing that and updating our code for creating the PayPal button as follows:
var ppArgs = {
width: Ti.UI.FILL,
height:"50dp",
bottom:"20dp",
appId:"APP-80W284485P519543T",
textStyle: Titanium.Paypal.PAYPAL_TEXT_PAY, // Causes the button's text to change from "Pay" to "Donate"
buttonStyle: Ti.Paypal.BUTTON_194x37,
paypalEnvironment: Ti.Paypal.PAYPAL_ENV_SANDBOX,
feePaidByReceiver: false,
enableShipping: false,
payment: {
paymentType : Titanium.Paypal.PAYMENT_TYPE_SERVICE, // we added this
subtotal: price,
tax: 0,
shipping: 0,
currency:"USD",
recipient:"your_recipient@fake.com"
}
};
We were able to make test purchases after this.