Payment goes from buyer to seller directly, not through the site. You're free to use any payment method that you agree on with the other party, including Paypal.
As for paying the MM fee, Paypal is not an option, but some MMs allow you to pay them using Paypal and they'll cover the fee for you.
So yes, you can use Paypal, both for the MM fee (with certain MMs) and for paying the seller.