New Post: Paypal showing Status "Payment not verified"

It will work without, but you should configure the IPN for best results.

It is the URL in the ReturnNotifyURL section of the paypal.gateway
Step 11-14 of the configuration guide details this.

The troubleshooting step 12-c explains why:
If you do not specify the IPN URL in your PayPal profile, you will still be able to process credit
card payments, but payments made via PayPal accounts may show as "Payment not
verified".

Regards
Rob