I am having the exact same problem.
I cannot add PayPal as a billing method, despite being verified, having a card linked to it and all the requirements from the documentation page.
There is no error. When I wand to add the Billing method my only option is to add a card. There is no way for me to link PayPal. I understand there needs to be a guarantee behind that PayPal, so it is an old account, active, with cards linked to it and so on. But at the moment there is no option for me to link it to UpWork
I apologize for the delay in receiving an update. I'll go ahead and follow up with the team handling your case and you can expect one of our agents to reach out to you directly via support ticket as soon as possible.
Thank you for your patience.
I was just checking your case and wondered if you were able to click Add Method button in your Billing Methods Settings and then scroll down a little to see PayPal. Credit card is the first option and PayPal is right below it: