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As you can see here: https://developer.paypal.com/docs/classic/api/errorcodes/ the error above refers to the following:
10500 Invalid Configuration This transaction cannot be processed due to an invalid merchant configuration. Occurs when you have not agreed to the billing agreement. DoDirectPayment 10501 Invalid Configuration This transaction cannot be processed due to an invalid merchant configuration. Occurs when the billing agreement is disabled or inactive. DoDirectPayment
You need to agree and active the billing agreement in your PayPal account.
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