PayPal, the popular online payment service, is teaming up with Xbox LIVE. As announced by Major Nelson :

"Once you’ve linked your PayPal account to your Xbox LIVE account on Xbox.com, you’ll be off and running to use it as a billing option, allowing you to buy content such as Microsoft Points, Xbox LIVE Gold subscriptions and Games on Demand titles."

PayPal will be available beginning today via an update. This firmware update also introduces a an automatic standby option to save energy and the ability to read an upgraded disc format with more information.