Admittedly I haven't done a close read, but on first skimming I didn't see anything that limits this to commercial transactions between arms-length buyers and sellers. Where are you getting that from?

To my view, there's a world of difference between "You can't use PayPal as a payment processor for gun sales" and "You can't use PayPal to pay pals back for covering your range fees last Saturday."

Yet the AUP seems broad enough to cover both: "You may not use the PayPal service for activities that... relate to transactions involving... ammunition, firearms, or certain firearm parts or accessories...." https://www.paypal.com/us/legalhub/acceptableuse-full