<?php

mysql_connect("localhost", "user", "password") or die(mysql_error());
mysql_select_db("PayPal") or die(mysql_error());

// read the post from PayPal system and add 'cmd'
$req = 'cmd=_notify-validate';
foreach ($_POST as $key => $value) {
$value = urlencode(stripslashes($value));
$req .= "&$key=$value";
}
// post back to PayPal system to validate
$header = "POST /cgi-bin/webscr HTTP/1.0
";
$header .= "Content-Type: application/x-www-form-urlencoded
";
$header .= "Content-Length: " . strlen($req) . "

";

$fp = fsockopen ('ssl://www.paypal.com', 443, $errno, $errstr, 30);

if (!$fp) {
// HTTP ERROR
} else {
fputs ($fp, $header . $req);
while (!feof($fp)) {
$res = fgets ($fp, 1024);
if (strcmp ($res, "VERIFIED") == 0) {

// PAYMENT VALIDATED & VERIFIED!

}

else if (strcmp ($res, "INVALID") == 0) {

// PAYMENT INVALID & INVESTIGATE MANUALY!

}
}
fclose ($fp);
}
?>

Source: http://net.tutsplus.com/tutorials/php/using-paypals-instant-payment-notification-with-php/

PayPal IPN Snippet

PHP