One of the reasons Apple doesn't want to get involved in the whole physical product payments area is there are a number of additional regulatory and liability issues.

But I don't think you have to be lumbered with PayPal - there are lots of great options for taking payment for physical products through apps. Stripe even have an out of the box UI layer for iOS to handle credit card payments, and they'll only charge you 2.5%.

I admit some providers (like Stripe) are currently geographically restricted, but that's going to change in the short to mid-term. Going forward there's lots of potential outside of Apple.